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Get filing alertsPega Q3: Cloud ACV up 20% but GAAP net income falls 68% on litigation charge
Filed October 20, 2026 · Period ending October 20, 2026 · ~1 min read
Key Changes
-
high
Pega Cloud ACV grew 20% YoY to $975.99M, the key cloud adoption metric.
Exhibit 99.1 view on EDGAR → -
high
Total ACV rose 6% (7% constant currency) to $1.653B, but growth slowed due to go-to-market execution challenges.
Exhibit 99.1 view on EDGAR → -
high
GAAP net income fell 68% YoY to $14.09M, including a $16M litigation settlement charge.
Exhibit 99.1 view on EDGAR → -
medium
Q3 revenue increased 3% YoY to $393.36M; nine-month revenue was flat.
Exhibit 99.1 view on EDGAR → -
medium
CFO targets $700M+ free cash flow in 2028.
Exhibit 99.1 view on EDGAR →
Summary
Pegasystems reported third-quarter 2026 results showing continued cloud momentum but a sharp drop in GAAP profitability. Pega Cloud ACV grew 20% year over year to $975.99 million, while total ACV rose 6% (7% in constant currency) to $1.65 billion. However, management acknowledged that ACV growth slowed significantly during the first nine months of 2026 due to go-to-market execution challenges.
Total revenue increased 3% to $393.36 million, but GAAP net income fell 68% to $14.09 million, reflecting lower operating income and a $16 million litigation settlement charge. For retail investors, the key takeaway is that Pega's cloud transition is progressing, but profitability is under pressure from one-time charges and execution issues.
The company's CFO reiterated a target of delivering $700 million or more in free cash flow in 2028, signaling confidence in long-term cash generation despite near-term headwinds. The filing does not flag any new red flags beyond the disclosed slowdown and litigation charge.
Section-by-Section Diff
Event · Exhibit 99.1
Pega reports Q3 2026 results: Pega Cloud ACV up 20%, total ACV up 6%, but GAAP net income fell 68%.
Added in current filing · view on EDGAR →
Pega Cloud $ 975,991 $ 815,370 $ 160,621 20 % 20 %
Pega Cloud annual contract value (ACV) grew 20% year over year to $975,991 thousand as of September 30, 2026, from $815,370 thousand a year earlier. This is the company's key cloud adoption metric and shows continued expansion of its cloud business.
Added in current filing · view on EDGAR →
Total revenue $ 393,359 $ 381,350 3 % $ 1,244,048 $ 1,241,495 — %
Third quarter 2026 total revenue was $393,359 thousand, up 3% from $381,350 thousand in Q3 2025. Nine-month revenue was essentially flat at $1,244,048 thousand versus $1,241,495 thousand.
Added in current filing · view on EDGAR →
Net income - GAAP $ 14,092 $ 43,364 (68) % $ 60,190 $ 158,863 (62) %
GAAP net income fell 68% in Q3 2026 to $14,092 thousand from $43,364 thousand a year earlier, and fell 62% for the nine-month period to $60,190 thousand. The decline reflects lower operating income and a $16,000 thousand litigation settlement charge.
Added in current filing · view on EDGAR →
keep us on track to deliver $700M or more of free cash flow in 2028
CFO Ken Stillwell stated the company is taking actions to improve execution and accelerate growth, with a target of delivering $700 million or more of free cash flow in 2028. This provides a long-term financial target for investors.
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Figures/quotes linked to EDGAR · Narrative written by AI · Oct 21, 2026 · How we verify