What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-02-17 compared with 2020-02-12 · 117 added, 88 removed, 83 unchanged (71% of the section changed)

We develop, market, license, host, and support enterprise software applications that help organizations transform the way they engage with their customers and process work across their enterprise.

We develop, market, license, host, and support enterprise software applications that help organizations transform how they engage with their customers and process work.

We also license our low code Pega Platform™ for rapid application development to clients that wish to build and extend their business applications.

5 unchanged sentences

Whether we are successful depends, in part, on our ability to:

successfully execute our marketing and sales strategies;

• execute our marketing and sales strategies;

• appropriately manage our expenses as we grow our organization;

• effectively develop new products and enhance our existing products;

successfully incorporate acquired technologies into our applications and unified Pega Platform.

Pega Infinity™, the latest version of our software, helps connect enterprises to their customers in real-time across channels, streamline business operations, and adapt to meet changing requirements.

• incorporate acquired technologies into our applications and unified Pega Platform.

Cloud Transition

We are in the process of transitioning our business to sell software primarily through subscription arrangements, particularly Pega Cloud (“Cloud Transition”).

Until we substantially complete our Cloud Transition, which we anticipate will occur in early 2023, we expect to continue to experience lower revenue growth and lower operating cash flow growth or negative cash flow.

The actual mix of revenue and new arrangements in a given period can fluctuate based on client preferences.

See risk factor "If we fail to manage our transition to a more subscription-based business model successfully, our results of operations and/or cash flows could be negatively impacted." in Item 1A of this Annual Report for additional information.

Coronavirus (“COVID-19”)

As of December 31, 2020, COVID-19 has not had a material impact on our results of operations or financial condition.

COVID-19's ultimate impact on our operational and financial performance will depend on future developments, including the duration and spread of the outbreak and the impact of COVID-19 on our sales cycles, partners, vendors, and employees, all of which is uncertain and unpredictable.

Our shift towards subscription-based revenue streams, the industry mix of our clients, the substantial size and available resources of our clients, and the critical nature of our products to our clients may reduce or delay the impact of COVID-19 on our business.

However, it is not possible to estimate the ultimate impact that COVID-19 will have on our business at this time.

See “Coronavirus (“COVID-19”)” in Item 1A of this Annual Report for additional information.

Relocation of Corporate Headquarters

On February 12, 2021, we entered into an agreement with our landlord to vacate our Cambridge, Massachusetts corporate headquarters on October 1, 2021, in exchange for a one-time payment to us of $18 million.

We expect to enter into a new lease agreement for a facility within the greater Boston area.

Pega Infinity™, the latest version of our software portfolio, helps connect enterprises to their customers in real time across channels, streamline business operations, and adapt to meet changing requirements.

Our applications and platform intersect with and encompass several software markets, including:

4 unchanged sentences

• Decision Management, including predictive and adaptive analytics;

Low-code application development platforms, including Mobile Application Development Platforms (“MADP”);

• Low code application development platforms, including Multi-experience Development Platforms (“MXDP”);

• Vertical-Specific Software (“VSS”) market of industry solutions and packaged applications.

2 unchanged sentences

At the center of our customer engagement applications is the Pega Customer Decision Hub™, our real time AI engine, which can predict a customer’s behavior and recommend the “next best action” to take across channels in real time.

Pega Marketing ™ is designed to enable enterprises to improve customer acquisition and experiences across inbound, outbound, and paid media channels.

It is designed to enable enterprises to improve customer acquisition and experiences across inbound, outbound, and paid media channels.

It incorporates AI in the form of predictive and machine-learning analytics, as well as business rules, and executes these decisions in real time to evaluate the context of each customer interaction and dynamically deliver the most relevant action, offer, content, and channel.

Pega Sales Automation ™ automates and manages the entire sales process, from prospecting to product fulfillment.

It allows enterprises to capture best practices and leverages AI to guide sales teams through the sales and customer onboarding processes.

Pega Customer Service ™ is designed to anticipate customer needs, connect customers to the right people and systems, and automate or intelligently guide customer interactions, to rapidly and continuously evolve the customer service experience, and to allow enterprises to deliver consistent interactions across channels and improve employee productivity.

Customer Service

The Pega Customer Service™ application simplifies customer service.

It is designed to anticipate customer needs, connect customers to the right people and systems, and automate or intelligently guide customer interactions, to rapidly and continuously evolve the customer service experience, and to allow enterprises to deliver consistent interactions across channels and improve employee productivity.

The application consists of a contact center desktop, case management for customer service, chat, knowledge management, mobile field service, omnichannel self-service, AI-powered virtual assistants, and industry-specific processes (“Microjourneys™”) and data models.

Digital process automation

We offer software that supports Digital Process Automation (DPA), an architecture that allows organizations to take an end-to-end approach to transformation by using intelligence and design thinking to streamline processes and create better experiences for their customers and employees.

DPA goes beyond traditional Business Process Management (BPM) to unify technology and enable organization-wide digital transformation.

For clients who want to extend intelligence and automation into the early stages of the customer journey, Pega Sales Automation™ automates and manages the entire sales process, from prospecting to product fulfillment.

It allows enterprises to capture best practices and leverage AI to guide sales teams through the sales and customer onboarding processes.

Intelligent Automation

Our software for Intelligent Automation boosts the efficiency of our clients’ processes.

This technology allows organizations to take an end-to-end approach to transformation by using intelligence and design thinking to streamline processes and create better experiences for their customers and employees.

Intelligent automation goes beyond traditional Business Process Management (BPM) to unify technologies such as Robotic Process Automation (RPA) and Artificial Intelligence (AI) and enable organization-wide digital transformation.

The Pega Platform, with its intelligent automation capabilities, allows clients to break down silos, improve customer-centricity, add agility to legacy technology, and provide end-to-end automation to support the needs of customers and employees.

5 unchanged sentences

making customer and employee-facing processes more efficient through end-to-end automation and robotics.

Real-time, omnichannel AI

AI has been around for many years, in many forms, yet only in the past decade have businesses started using its practical applications, fueled by the new abundance of data to power decisions and ever-increasing customer expectations.

Our customer engagement and other applications built on the Pega Platform leverage predictive and adaptive analytics to deliver more personalized customer experiences and maximize business objectives.

The Pega Customer Decision Hub, a centralized, always-on “brain,” unleashes the power of predictive analytics, machine learning, and real-time decisioning across our clients’ data, systems, and touchpoints - orchestrating engagement across customer interaction channels.

End-to-end robotic automation

We bring together both human-assisted robotic desktop automation and unattended robotic process automation with our unified DPA and case management capabilities.

This gives our platform and applications the ability to automate both customer-facing and back-office operational processes from “end to end,” connecting across organizational and system silos to seamlessly connect customers and employees to successful customer experiences.

Journey-centric rapid delivery

Our customer engagement and DPA solutions are designed to improve targeted customer outcomes, quickly and with out-of-the-box functionality that connects enterprise data and systems to customer experience channels.

From there, organizations can scale, one customer

experience at a time, to realize greater value while delivering increasingly consistent and personalized customer experiences.

We deliver our solution through our Center-out Business™ Architecture ® , which enables clients to transcend channels and internal data silos to achieve both quick wins and long-term transformation.

This approach insulates business logic from back-end and front-end complexity, delivering both consistent experiences to customers and agility to the business.

The key aspects of this architecture are:

Centrally-managed intelligence

Pega’s centrally-managed intelligence ensures AI and business rules operate across all channels.

Applications built on the Pega Platform leverage predictive and adaptive analytics to deliver more personalized customer experiences and maximize business objectives.

For example, Pega Customer Decision Hub, a centralized, always-on “customer brain,” unleashes the power of predictive analytics, machine learning, and real time decisioning across our clients’ data, systems, and touchpoints - orchestrating engagement across customer interaction channels.

End-to-end automation aligned with business outcomes

We bring together human-assisted robotic desktop automation and unattended robotic process automation with our unified process and case management capabilities.

This provides our platform and applications the differentiated ability to automate both customer-facing and back-office operational processes from “end to end,” connecting across organizational and system silos to connect customers and employees to outcomes seamlessly and easily.

Consistent omni-channel experiences

With business and process logic centrally defined, Pega provides dynamic, open APIs to keep front-end channels and business logic operating in alignment for consistent customer experiences.

By leveraging cutting-edge user interface (UI) technology, Pega-powered processes and decisions can be easily embedded into existing front-ends or used as the basis for new employee-facing applications.

Insulation of back-end complexity

Pega’s architecture insulates case and decision logic from the complexity of back-end systems.

Our data virtualization automatically pulls in needed data in a common structure, regardless of source.

This capability gives clients the agility to build new experiences on existing systems, modernizing legacy systems without breaking existing processes.

A Layered approach to managing variation

Pega’s Situational Layer Cake organizes logic into layers that map to the unique dimensions of a client’s business – customer types, lines of business, geographies, etc.

This layered approach lets organizations manage variations of their business without duplicating logic.

This capability allows initial deployments into a single department or region to seamlessly scale to manage the complexity of a global, multi-line enterprise.

In addition to our Center-out Business Architecture, Pega technology has been designed to be deployed rapidly, be changed easily, and scale across changing architecture needs.

Pega Express™ Methodology and low code

Our solutions are designed to quickly improve targeted customer outcomes and with out-of-the-box functionality that connects enterprise data and systems to customer experience channels.

From there, organizations can scale, one customer experience at a time, to realize greater value while delivering increasingly consistent and personalized customer experiences.

We prescribe a “Microjourney™” approach to delivery that breaks customer journeys into discrete processes that drive meaningful outcomes, such as “inquiring about a bill” or “updating an insurance policy.” This allows us to combine design-thinking and out-of-the-box functionality to deliver rapid results and ensure the ability to enhance the application going forward.

Software That Writes Your Software ®

Our approach bypasses the error-prone and time-consuming process of manually translating requirements into code.

Our approach leverages low code to improve business and IT collaboration and bypass the error-prone and time-consuming process of manually translating requirements into code.

Users design software in low code visual models that reflect the needs of the business.

1 unchanged sentence

Changes to the code are made by altering the model, and application documentation is generated directly from the model.

The Pega Platform is standards-based and can leverage a client’s existing technology to create new business applications that cross technology silos and bridge the front and back-office.

Unified future-proof platform

We offer a unified DPA platform, combining robotics, process automation, and case management together in a unified architecture.

We build in powerful decision analytics, designed to allow our clients to automate any process while working faster and smarter.

Our low-code architecture is designed to empower organizations to scale across all dimensions of their business, including product lines, departments, and geographies, by reusing components and avoiding the traditional method of deploying multiple customer engagement and DPA instances that lead to even more silos and disjointed customer experiences.

Pega Cloud ® allows clients to develop, test, and deploy, on an accelerated basis, our applications and the Pega Platform using a secure, flexible internet-based infrastructure, minimizing cost while focusing on core revenue-generating competencies.

Clients can also choose to manage the Pega deployment themselves (“client cloud”) using the cloud architecture they prefer.

This cloud choice between Pega and client managed cloud gives our clients the ability to select, and change as needed, the best cloud architecture for the security, data access, speed-to-market, and budget requirements of each application they deploy.

This multi-cloud approach of both Pega Cloud and client-managed cloud gives our clients the ability to select, and change as needed, the best cloud architecture for the security, data access, speed-to-market, and budget requirements of each application they deploy.

Our Services and Support

1 unchanged sentence

We also use third-party contractors to assist us in providing these services.

Global Client Success

Our Global Client Success group guides our clients on how to maximize their investment in our technology and realize the business outcomes they are targeting.

• Global Client Success – Our Global Client Success group guides our clients on how to maximize their investment in our technology and realize the business outcomes they are targeting.

This includes building implementation expertise and creating awareness of product features and capabilities.

Global Service Assurance

Our Global Service Assurance group addresses risks to client success because of technical concerns.

• Global Service Assurance – Our Global Service Assurance group addresses risks to client success because of technical concerns.

By providing technical staff dedicated to client success, we reduce the time to resolve technical issues, eliminate lengthy deliberations of technical resource logistics, and increase clients’ confidence in our technology and client service.

Global Client Support

Our Global Client Support group provides technical support for our products and Pega Cloud services.

• Global Client Support – Our Global Client Support group provides technical support for our products and Pega Cloud services.

Support services include cloud service reliability management, online support community management, self-service knowledge, proactive problem prevention through information and knowledge sharing, problem tracking, prioritization, escalation, diagnosis, and resolution.

The success of our sales strategy for repeat sales to target clients depends on our ability to train a large number of partners and clients to implement our technology.

• Pega Academy – The success of our sales strategy for repeat sales to target clients depends on enablement and ecosystem engagement.

We have increased our ability to train a large number of partners and clients to implement our technology and made it easier for individuals to stay current with our technology as it evolves.

We offer both instructor-led and online training to our employees, clients, and partners.

We have also partnered with universities to provide our courseware as part of the student curriculum to expand our ecosystem.

We collaborate with global systems integrators and technology consulting firms that provide consulting services to our clients.

Strategic partnerships with these firms are important to our sales efforts, because they influence buying decisions, help us to identify sales opportunities, and complement our software with their domain expertise and services capabilities.

These partners may deliver strategic business planning, consulting, project management, and implementation services to our clients.

Currently, our partners include well-respected major firms, such as Accenture PLC, Amazon.com, Inc., Capgemini SA, Cognizant Technology Solutions Corporation, EY, Infosys Limited, Merkle, PwC, Tata Consultancy Services Limited, Tech Mahindra Limited, Virtusa Corporation, and Wipro Limited.

Engagement is an important part of our strategy to create a broad ecosystem that is passionate about Pega technology.

We collaborate with global systems integrators and technology consulting firms that provide consulting services to our clients, as well as Independent Software Vendors (“ISVs”) and technology partners that extend clients’ investments with integrated solutions .

In addition, Authorized Training Partners (“ATPs”) support Pega customers in local languages, while our Workforce Development Partners let clients outsource their recruiting .

Strategic partnerships with these firms are important to our sales efforts because they influence buying decisions, identify sales opportunities, and complement our software with their domain expertise, solutions, and services capabilities.

These partners may deliver strategic business planning, consulting, project management, training, and implementation services to our clients.

Our partners include well-respected major firms, such as Accenture PLC, Amazon.com, Inc., Capgemini SA, Coforge, Cognizant Technology Solutions Corporation, EY, HCL Infosys, Merkle, PwC, Tata Consultancy Services Limited, Tech Mahindra Limited, Virtusa Corporation, and Wipro Limited.

Target Clients

4 unchanged sentences

• Financial services – Financial services organizations rely on software to market, onboard, cross-sell, retain, and service their customers, as well as automate the operations that support these customer interactions.

Our customer service, sales, new account onboarding, Know Your Customer (“KYC”), marketing, collections, and dispute management applications allow clients to be responsive to changing business requirements.

Our intelligent automation, customer service, account onboarding, Know Your Customer (“KYC”), payment dispute and exception management, collections, and next best action solutions allow clients to improve the efficiency of their operations and provide better service to their customers.

• Life sciences – Life sciences organizations are looking for solutions to improve customer engagement, as well as increase efficiencies and transparency across the product development lifecycle.

Our customer engagement, clinical, and pharmacovigilance applications are designed to deliver customer engagement, safety and risk management, and regulatory transparency.

• Healthcare – Healthcare organizations seek software that integrates their front and back-offices and helps them deliver personalized care and customer service while reducing costs, automating processes, and increasing operational efficiency.

Our applications allow healthcare clients to address the sales, service, operational, financial, administrative, and regulatory requirements of healthcare consumerism and reform.

Manufacturing and high tech - Manufacturers and high tech companies worldwide are transforming their businesses to better engage customers and suppliers, as well as to directly manage product performance throughout the product lifecycle.

Our manufacturing applications address customer service and field service, manage warranties, recalls, repairs, returns, improve the performance of direct sales forces, and extend existing enterprise resource planning system capabilities.

• Communications and media – Communications and media organizations need to address high levels of customer churn, growing pressure to increase revenue, and an ability to respond quickly to changing market conditions.

Our applications enable organizations to reshape the way they engage with customers and increase customer lifetime value throughout the customer lifecycle by delivering omnichannel, personalized customer experiences.

Our applications are designed to solve the most critical business issues, including acquiring more customers at a higher margin, increasing cross-sell/upsell, improving the efficiency and effectiveness of customer service, and streamlining sales and quoting.

Insurance - Insurance companies, whether competing globally or nationally, need software to automate the key activities of distribution management, quoting, underwriting, claims, and policy servicing.

Our applications are designed to solve the most critical business issues, including acquiring more customers at a higher margin, increasing cross-sell/upsell, improving customer service efficiency and effectiveness, and streamlining sales and quoting.

• Government – Government agencies need to modernize legacy systems and processes to meet the growing demands for improved constituent service, lower costs, reduced fraud, and greater transparency.

Our applications deliver advanced capabilities to help streamline operations and optimize service delivery through an agile, low risk approach.

• Insurance – Insurance companies, whether competing globally or nationally, need software to automate policyholder acquisition, cross sell/upsell, underwriting, claims, policy service, and retention activities across operations and channels of distribution.

Insurers are also becoming increasingly sensitive to ways to improve customer service and the overall customer experience.

Our applications for insurance carriers are designed to help increase business value by delivering customer-focused experiences and personalized interactions that help drive higher sales, lower expense ratios, and mitigate risk.

Government - Government agencies need to modernize legacy systems and processes to meet the growing demands for improved constituent service, lower costs, reduced fraud, and greater levels of transparency.

Our applications deliver advanced capabilities to help streamline operations and optimize service delivery through an agile, omnichannel approach.

Consumer services - Consumer services organizations provide services to a range of consumers in industries such as transportation, utilities, consumer-focused internet companies, retail, hospitality, and entertainment.

Our marketing, customer service, and sales applications help these organizations personalize their customer engagement to acquire more customers, drive revenue through cross-sell/upsell, and increase service efficiency while increasing customer satisfaction.

Life sciences - Life sciences organizations are looking for solutions to improve customer engagement, as well as increase efficiencies and transparency across the product development lifecycle.

Our customer engagement, clinical, and pharmacovigilance applications are designed to deliver customer engagement, safety and risk management, and regulatory transparency.

• Manufacturing and high tech – Manufacturers and high tech companies worldwide are transforming their businesses to engage customers and suppliers better, as well as to directly manage product performance throughout the product lifecycle.

• Consumer services – Consumer services organizations provide services to a range of consumers in industries such as transportation, utilities, internet providers, retail, hospitality, and entertainment.

Our 1:1 customer engagement, customer service, and intelligent automation solutions help these organizations personalize their customer engagement to acquire more customers, drive revenue through cross-sell/upsell, and increase service efficiency while increasing customer satisfaction.

The markets for our offerings are intensely competitive, rapidly changing, and highly fragmented, as current competitors expand their product offerings and new companies enter the market.

See "The market for our offerings is intensely and increasingly competitive, rapidly changing, and fragmented" in Item 1A of this Annual Report for additional information.

We encounter competition from:

customer engagement, including CRM application vendors;

DPA, including BPM vendors, low-code application development platforms, and service-oriented architecture middleware vendors;

case management vendors;

decision management, data science, and AI vendors, as well as vendors of solutions that leverage decision making and data science in managing customer relationships and marketing;

robotic automation and workforce intelligence software providers;

companies that provide application-specific software for financial services, healthcare, insurance, and other specific markets;

mobile application platform vendors;

co-browsing software providers;

social listening, text analytics, and natural language processing vendors;

commercialized open source vendors;

professional service organizations that develop their own products or create custom software in conjunction with rendering consulting services;

clients’ in-house information technology departments, which may seek to modify their existing systems or develop their own proprietary systems.

Competitors vary in size, scope, and breadth of the products and services they offer and include some of the largest companies in the world, such as Salesforce.com, Microsoft Corporation, Oracle Corporation, SAP SE, and International Business Machines Corporation (“IBM”) .

We compete in the CRM, including marketing, sales, and customer service, and DPA, including BPM, case management, decision management, robotic automation, co-browsing, social engagement, and mobile application development platform software markets, as well as in markets for the vertical applications we provide (e.g., Pega KYC™ for Financial Services, Pega Underwriting™ for Insurance).

We also compete with clients’ internal information systems departments that seek to modify their existing systems or develop their own proprietary systems, and professional service organizations that develop their own products or create custom software in conjunction with rendering consulting services.

Competitors vary in size, scope, and breadth of the products and services they offer and include some of the world’s largest companies, including Salesforce.com, Microsoft Corporation, Oracle Corporation, SAP SE, ServiceNow, and International Business Machines Corporation (“IBM”).

We have been most successful in competing for clients whose businesses are characterized by a high degree of change, complexity, or regulation.

We believe the principal competitive factors within our market include:

product adaptability, scalability, functionality, and performance;

proven success in delivering cost-savings and efficiency improvements;

proven success in enabling improved customer interactions;

ease-of-use for developers, business units, and end-users;

timely development and introduction of new products and product enhancements;

establishment of a significant base of reference clients;

ability to integrate with other products and technologies;

customer service and support;

product price;

vendor reputation;

relationships with systems integrators.

We believe we are competitively differentiated from our competitors because our unified Pega Platform is designed to allow client business and IT staff, using a single, intuitive user interface, to build and evolve enterprise applications in a fraction of the time it would take with disjointed architectures and tools offered by many of our competitors.

3 unchanged sentences

In addition, we may be at a competitive disadvantage against our larger competitors with respect to our ability to provide expertise outside our target industries.

See risk factor "The market for our offerings is intensely and increasingly competitive, rapidly changing, and fragmented" in Item 1A of this Annual Report for additional information.

Intellectual Property

2 unchanged sentences

We enter into confidentiality, intellectual property ownership, and license agreements with our employees, partners, clients, and other third parties.

We also control access to and ownership of software, services, documentation, and other proprietary information to protect our proprietary rights.

We also control access to and ownership of software, services, documentation, and other information to protect our proprietary rights.

Sales and Marketing

We sell our software and services primarily through a direct sales force.

We encourage our direct sales force and outside partners to co-market, pursue joint sales initiatives, and drive broader adoption of our technology, helping us grow our business more efficiently and focus our resources on continued innovation and enhancement of our solutions.

In addition, strategic partnerships with management consulting firms and major systems integrators are important to our sales efforts because they influence buying decisions, help us identify sales opportunities and complement our software and services with their domain expertise and consulting capabilities.

We also partner with technology providers and application developers.

To support our sales efforts, we conduct a broad range of marketing programs, including awareness advertising, client and industry-targeted solution campaigns, trade shows, including our PegaWorld ® user conference, solution seminars and webinars, industry analyst and press relations, web and digital marketing, community development, social media presence, and other direct and indirect marketing efforts.

consulting employees, business partners, and other third parties also conduct joint and separate marketing campaigns that generate sales leads for us.

To support our sales efforts, we conduct a broad range of marketing programs, including awareness advertising, client and industry-targeted solution campaigns, trade shows, including our PegaWorld ® iNspire user conference, solution seminars and webinars, industry analyst and press relations, web and digital marketing, community development, social media presence, and other direct and indirect marketing efforts.

Our consulting employees, business partners, and other third parties also conduct joint and separate marketing campaigns that generate sales leads for us.

Research and Development

Our research and development organization is responsible for product architecture, core technology development, product testing, and quality assurance.

Our product development priority is to continue expanding the capabilities of our technology and ensure we deliver superior cloud native solutions.

Our product development priority is to continue expanding our technology’s capabilities and ensure we deliver superior cloud-native solutions.

We intend to maintain and extend the support of our existing applications, and we may choose to invest in additional strategic applications that incorporate the latest business innovations.

1 unchanged sentence

Our goal with all products is to enhance product capabilities, ease of implementation, long-term flexibility, and the ability to provide improved client service.

As of January 31, 2020 , we had 5,155 employees worldwide, of which 2,175 were based in the Americas, 1,148 were based in Europe, and 1,832 were based in Asia-Pacific.

As of December 31, 2019 , we expected to recognize $836 million in revenue in future periods from backlog on existing contracts.

We must fulfill certain conditions related to these agreements before recognizing revenue, and there can be no assurance when, if ever, we will be able to satisfy all such conditions.

As of December 31, 2020, we expected to recognize approximately $1.1 billion in revenue in future periods from backlog on existing contracts.

See "Remaining performance obligations ("Backlog")" in Item 7 of this Annual Report for additional information.

As of January 31, 2021, we had 5,776 employees, of which 2,476 were based in the Americas, 1,306 were based in Europe, 1,668 were based in India, and 326 were based elsewhere in Asia-Pacific.

As a high technology company, our employees are critical to our success.

We strive to be an employer of choice that can attract and retain exceptional talent.

We aim to create a corporate culture that is equitable, inclusive, and diverse.

We believe that encouraging employee development will help achieve our goal of developing, expanding, and retaining our workforce to support our business.

We build our corporate culture through a variety of initiatives, including global inclusion and diversity, employee engagement, pay equity, and employee development.

Global Inclusion and Diversity

An inclusive and diverse culture contributes to our ability to deliver innovative products and services, which is critical to our success.

Our commitment to inclusion and diversity begins with a highly skilled and diverse board and includes our commitment to educate both managers and individual contributors about our corporate values.

In 2020, we made significant investments in furthering our culture of inclusion, including hiring a Global Leader of Inclusion and Diversity and Diversity Talent Attraction Partner.

We expanded our diversity recruiting efforts and delivered inclusivity workshops to leaders at all levels, among other efforts.

We also currently sponsor formal resource groups for women, veterans, and members of the black and LGBTQIA+ communities, and plan to launch four additional resource groups in the first half of 2021.

Employee Engagement, Health, and Well-Being

Our efforts to recruit and retain diverse and passionate employees include providing competitive rewards packages and ensuring active communication throughout the Company.

We regularly solicit and collect feedback to better understand and improve our employee experience and identify opportunities to strengthen our corporate culture.

In 2020, in addition to our annual employee survey and continuous feedback tools, we hosted monthly check-in chats with our leadership team to directly address our employees’ questions and constructive feedback.

We are committed to creating an environment that supports our employees’ health and overall well-being, focusing on physical, emotional, financial, and personal wellness.

PegaUp!, our employee wellness program, includes such programs as awareness campaigns, fitness classes, guided meditation, and health, wellness, and financial seminars.

We compensate our employees for what they do and how they do it, regardless of their gender, race, or other personal characteristics.

To deliver on that commitment, we benchmark and set pay ranges based on market data and consider individual factors, such as an employee’s role and experience, job location, and job performance.

We also regularly review our compensation practices, both in terms of our overall workforce and individual employees, to ensure our pay is fair and equitable.

Employee Development

Employee development underpins our efforts to execute our strategy and continue to create and sell innovative products and services.

We continually invest in our employees’ career growth and provide employees with a wide range of development opportunities, including formal and informal learning, mentoring, and coaching.

Pega Academy helps employees as well as clients and partners more rapidly gain and advance Pega software skills.

To ensure our business’s long-term continuity, we actively manage the development of talent to fill the roles most critical to our success.

To support our current and future leaders’ development, Pega currently offers five programs addressing the development of people managers and leaders in a cohort format comprised of all functions and geographies.

We also provide educational resources and classes, career training, and education reimbursement programs.

In 2020, more than 90% of our employees participated in a formal education program.

Corporate Information

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business