What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-12 compared with 2024-02-14 · 237 added, 141 removed, 995 unchanged (28% of the section changed)

10 unchanged sentences

To the stockholders and the Board of Directors of Pegasystems Inc.

Cambridge, Massachusetts

Opinions on the Financial Statements and Internal Control over Financial Reporting

78 unchanged sentences

Deferred revenue 423,910 377,845

Convertible senior notes, net 467,470 —

Other current liabilities 18,866 21,343

10 unchanged sentences

Additional paid-in capital 526,963 379,584

(Accumulated deficit) ( 8,705 ) ( 76,513 )

Retained earnings (accumulated deficit) 87,901 ( 8,705 )

Accumulated other comprehensive (loss)

25 unchanged sentences

General and administrative 112,848 96,743 117,734

Litigation settlement, net of recoveries

Restructuring 4,528 21,747 21,743

6 unchanged sentences

Other income, net 1,385 18,693 6,579

Income (loss) before provision for (benefit from) income taxes 95,440 ( 161,797 ) ( 131,987 )

Provision for (benefit from) income taxes 27,632 183,785 ( 68,947 )

Income (loss) before provision for income taxes 142,636 95,440 ( 161,797 )

Provision for income taxes 43,447 27,632 183,785

Net income (loss) $ 99,189 $ 67,808 $ ( 345,582 )

12 unchanged sentences

Net income (loss) $ 99,189 $ 67,808 $ ( 345,582 )

Other comprehensive income (loss), net of tax

Unrealized gain (loss) on available-for-sale securities 152 ( 169 ) 640

Other comprehensive (loss) income, net of tax

Unrealized (loss) gain on available-for-sale securities ( 439 ) 152 ( 169 )

Foreign currency translation adjustments ( 11,927 ) 5,039 ( 15,913 )

Total other comprehensive income (loss), net of tax 5,191 ( 16,082 ) ( 4,040 )

Total other comprehensive (loss) income, net of tax ( 12,366 ) 5,191 ( 16,082 )

Comprehensive income (loss) $ 86,823 $ 72,999 $ ( 361,664 )

8 unchanged sentences

January 1, 2022 81,712 $ 817 $ 145,810 $ 276,449 $ ( 6,988 ) $ 416,088

Cumulative-effect adjustment from adoption of ASU 2020-06, net — — ( 61,604 ) 9,399 — ( 52,205 )

Repurchase of common stock ( 280 ) ( 2 ) ( 24,506 ) — — ( 24,508 )

7 unchanged sentences

December 31, 2022 82,436 $ 824 $ 229,602 $ ( 76,513 ) $ ( 23,070 ) $ 130,843

Repurchase of common stock ( 280 ) ( 2 ) ( 24,506 ) — — ( 24,508 )

Issuance of common stock for stock compensation plans 1,212 12 8,893 — — 8,905

3 unchanged sentences

— — ( 10,005 ) — — ( 10,005 )

Other comprehensive (loss) — — — — ( 16,082 ) ( 16,082 )

Net (loss) — — — ( 345,582 ) — ( 345,582 )

Other comprehensive income — — — — 5,191 5,191

Net income — — — 67,808 — 67,808

December 31, 2023 83,840 $ 838 $ 379,584 $ ( 8,705 ) $ ( 17,879 ) $ 353,838

Repurchase of common stock ( 825 ) ( 8 ) ( 69,549 ) — — ( 69,557 )

Issuance of common stock for stock compensation plans 2,985 30 75,186 — — 75,216

3 unchanged sentences

— — ( 7,684 ) ( 2,583 ) — ( 10,267 )

Other comprehensive income — — — — 5,191 5,191

Other comprehensive (loss) — — — — ( 12,366 ) ( 12,366 )

Net income — — — 99,189 — 99,189

12 unchanged sentences

Amortization of intangible assets and depreciation 17,585 18,746 18,780

Lease expense 15,912 15,940 13,277

Amortization of right-of-use lease assets 17,842 15,912 15,940

Foreign currency transaction loss (gain)

912 5,242 ( 4,560 )

Loss on capped call transactions 663 1,348 57,382

Deferred income taxes ( 1,544 ) 363 168,890

(Accretion) amortization of investments ( 15,263 ) ( 3,302 ) 1,972

(Gain) on investments ( 869 ) ( 10,841 ) ( 6,578 )

29 unchanged sentences

Cash, cash equivalents, and restricted cash, end of period $ 341,529 $ 232,827 $ 145,054

Cash and cash equivalents $ 337,103 $ 229,902 $ 145,054

Restricted cash included in other current assets 98 — —

Restricted cash included in other long-term assets 4,328 2,925 —

Total cash, cash equivalents and restricted cash $ 341,529 $ 232,827 $ 145,054

Supplemental disclosures

Interest paid on convertible notes $ 3,810 $ 4,134 $ 4,500

Income taxes paid (refunded) $ 11,664 $ 7,645 $ ( 4,552 )

Income taxes paid $ 82,317 $ 11,664 $ 7,645

Non-cash investing and financing activity:

5 unchanged sentences

BASIS OF PRESENTATION

The Company develops, markets, licenses, hosts, and supports enterprise software that helps organizations build agility into their business.

The Company’s low-code platform for workflow automation and artificial intelligence-powered decisioning enables clients to personalize customer experiences, streamline customer service, and automate business processes and workflows.

The Company develops, markets, licenses, hosts, and supports enterprise software that helps organizations optimize decisions and processes in real-time.

The Company’s platform for enterprise artificial intelligence (“AI”) decisioning and workflow automation enables clients to personalize customer experiences, automate customer service, and streamline operations, business processes, and workflows.

The Company provides consulting, training, support, and hosting services to facilitate the use of its software.

2 unchanged sentences

Actual results could differ from those estimates.

Accounts with reported amounts based on significant estimates and judgments include, but are not limited to, revenue, unbilled receivables, deferred revenue, deferred income taxes, deferred commissions, income taxes payable, convertible senior notes, capped call transactions, intangible assets, and goodwill.

Principles of consolidation

27 unchanged sentences

Income statement line item

Perpetual license Residual approach Upon transfer of control to the client, defined as when the client can use and benefit from the license (point in time)

Effective date of the license Perpetual license

Pega Cloud Residual approach Ratably over the term of the service (over time) Annually, or more frequently, over the term of the service Subscription services

Term license Residual approach Upon transfer of control to the client, defined as when the client can use and benefit from the license (point in time)

2 unchanged sentences

Ratably over the term of the maintenance (over time) Annually, or more frequently, over the term of the maintenance Subscription services

Pega Cloud Residual approach Ratably over the term of the service (over time) Annually, or more frequently, over the term of the service Subscription services

Perpetual license Residual approach Upon transfer of control to the client, defined as when the client can use and benefit from the license (point in time)

Effective date of the license Perpetual license

- time and materials Observable hourly rate for time and materials-based services in similar geographies

41 unchanged sentences

The Company recognizes an asset for the incremental costs of obtaining a client contract, primarily related to sales commissions.

The Company expects to benefit from those costs for more than one year, as the Company primarily pays sales commissions on the initial contract.

As a result, there are no commensurate commissions paid on contract renewals.

Deferred commissions are allocated to each performance obligation within the contract and amortized according to the transfer of underlying goods and services within those contracts and expected renewals.

The Company expects to benefit from those costs for more than one year.

Commissions earned upon the execution of initial contracts are allocated to each performance obligation within the contract and amortized according to the transfer of underlying goods and services within those contracts and expected renewals.

The expected benefit period is determined based on the length of the client contracts, client attrition rates, the underlying technology lifecycle, and the competitive marketplace’s influence on the products and services sold.

2 unchanged sentences

Deferred costs allocated to consulting are amortized over a period consistent with the pattern of transfer of control for the related services.

Commissions earned on contract amendments and renewals are allocated to each performance obligation within the contract and amortized over the contractual term.

Financial instruments

20 unchanged sentences

Fixed lease costs are recognized on a straight-line basis over the lease term.

Variable lease costs are recognized in the period in which the obligation for those payments is incurred.

Variable lease costs include payments required under leases for common area maintenance, real estate taxes, utilities, service charges, and other variable costs that are not reflected in the measurement of right of use assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred.

The Company combines lease and non-lease components when determining lease costs for its office space leases.

12 unchanged sentences

Costs related to preliminary project activities and post-implementation activities are expensed as incurred.

The Company amortizes capitalized software costs generally over three to five years , commencing on the date the software is placed into service.

The Company amortizes capitalized internal-use software on a straight-line basis over its estimated useful life, which is generally over three to five years , commencing on the date the software is placed into service.

Goodwill represents the residual purchase price paid in a business combination after the fair value of all identified assets and liabilities have been recorded.

1 unchanged sentence

The Company has a single reporting unit.

The Company performed a qualitative assessments as of November 30, 2023, 2022, and 2021, respectively, and concluded that there was no impairment since it was not more-likely-than-not that the fair value of its reporting unit was less than its carrying value.

The Company performed qualitative assessments as of November 30, 2024, 2023, and 2022, respectively, and concluded that there was no impairment since it was not more-likely-than-not that the fair value of its reporting unit was less than its carrying value.

Intangible and long-lived assets

5 unchanged sentences

Cash equivalents include money market funds and other investments with original maturities of three months or less.

Restricted cash

The Company records restricted cash amounts as a current asset on the consolidated balance sheets if the restriction expires in less than 12 months, or as a non-current asset if the restriction is greater than 12 months.

If there is no minimum time frame during which the cash must remain restricted, the nature of the transactions related to the restriction determine the classification.

Restricted cash primarily relates to amounts deposited to secure customer guarantees and various letters of credit.

Business combinations

12 unchanged sentences

The Company recognizes stock-based compensation expense associated with equity awards based on the award’s fair value at the grant date.

Stock-based compensation is recognized over the requisite service period, which is generally the vesting period of the equity award and is adjusted each period for anticipated forfeitures.

Stock-based compensation expense is adjusted each period for anticipated forfeitures.

For service-based awards, stock-based compensation is recognized over the requisite service period, which is generally the vesting period.

For performance-based awards, stock-based compensation expense is recognized over the longer of (a) the implicit service period for performance-metric achievement or (b) the requisite service period.

During each reporting period, stock-based compensation expense is recorded based on expected achievement of performance targets.

Changes in estimates of the expected achievement of performance targets that result in a change in the number of shares that are expected to vest are recognized on a cumulative catch-up basis during the reporting period in which the estimate changed.

See "Note 16.

29 unchanged sentences

Advertising expenses were $ 4.7 million, $ 3.5 million, and $ 6.6 million during 2024, 2023, and 2022, respectively.

Newly adopted accounting pronouncements

Segment reporting

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

The amendments in ASU 2023-07 are effective for all public entities for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

ASU 2023-07 did not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

Under ASU 2023-07, public entities with a single reportable segment must apply all of the ASU’s disclosure requirements and the existing segment disclosure and reconciliation requirements in ASC 280 - Segment Reporting on an annual and interim basis.

The Company implemented this ASU in 2024 and its impact was immaterial.

Accounting pronouncements not yet effective

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09 , Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

ASU 2023-09 includes expanded income tax rate reconciliation disclosures, a disaggregation of income taxes paid, and other expanded disclosures.

The ASU will be effective for the Company for the year ending December 31, 2025.

The Company expects the adoption to result in disclosure changes only.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03 , Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (ASU “2024-03”).

Among other items, the requirements include expanded disclosures around employee compensation and selling expenses.

ASU 2024-03 will be effective for the Company for the year ending December 31, 2027.

The Company is still evaluating the impact of this new guidance on its consolidated financial statements but expect the adoption to result in disclosure changes only.

MARKETABLE SECURITIES

4 unchanged sentences

$ 402,948 $ 64 $ ( 142 ) $ 402,870 $ 193,431 $ 233 $ ( 228 ) $ 193,436

As of December 31, 2023, marketable securities’ maturities ranged from January 2024 to January 2026, with a weighted-average remaining maturity of 0.7 years.

As of December 31, 2024, marketable securities’ maturities ranged from January 2025 to December 2027, with a weighted-average remaining maturity of 0.3 years.

RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE

24 unchanged sentences

$ 234,492 100 %

Major clients

Clients that represented 10% or more of the Company’s total accounts receivable and unbilled receivables:

December 31, 2024 December 31, 2023

Accounts receivable 20 % *

Unbilled receivables — % *

Total receivables 11 % *

* Client accounted for less than 10% of receivables.

Contract assets

10 unchanged sentences

Deferred revenue

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

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

(in thousands)

30 unchanged sentences

(1) Included in other long-term assets.

During 2024, $ 17.8 million of depreciated assets were disposed of, which primarily related to office closures.

(in thousands) 2024 2023 2022

36 unchanged sentences

(in thousands) December 31, 2024 December 31, 2023

Prepaid expenses

$ 38,155 $ 33,647

Income tax receivables 58,359 4,804

Contract assets 13,498 16,238

Insurance receivable — 1,954

Indirect tax receivable 2,488 1,924

Capped call transactions 223 —

Restricted cash 98 —

Other 2,357 9,570

7 unchanged sentences

Contract assets 18,321 20,635

Income tax receivables

13,299 20,633

Intangible assets 3,832 7,002

4 unchanged sentences

$ 292,049 $ 314,696

Accrued expenses

(in thousands) December 31, 2024 December 31, 2023

Cloud hosting $ 1,802 $ 1,358

Outside professional services 10,639 10,419

Marketing and sales program 2,150 2,557

Income and other taxes 5,055 15,428

Employee related 4,833 4,486

Repurchases of common stock unsettled 1,500 —

Other 5,565 5,693

$ 31,544 $ 39,941

Other current liabilities

14 unchanged sentences

To assess performance, the Company’s CODM, the Chief Executive Officer, reviews financial information on a consolidated basis.

Therefore, the Company determined it has one operating segment and one reporting unit.

Therefore, the Company determined it has one operating segment and one reportable segment.

The accounting policies of the Company’s operating segment are the same as those described in "Note 2.

Significant Accounting Policies".

The CODM uses consolidated net income (loss) to set financial performance targets, assess performance, and make expense allocation decisions.

(in thousands) 2024 2023 2022

Total revenue $ 1,497,180 $ 1,432,616 $ 1,317,845

Total cost of revenue 390,665 378,483 368,635

450,527 474,405 519,192

84,253 84,772 105,597

Research and development 298,074 295,512 294,349

General and administrative 112,848 96,743 117,734

Other segment items, net (1)

18,177 7,261 74,135

Provision for income taxes 43,447 27,632 183,785

Net income (loss) $ 99,189 $ 67,808 $ ( 345,582 )

(1) Includes Litigation settlement, net of recoveries, Restructuring, Foreign currency transaction (loss) gain, Interest income, Interest expense, (Loss) on capped call transactions, and Other income, net.

Long-lived assets related to the Company’s U.S.

and international operations were:

(Dollars in thousands) December 31, 2023 December 31, 2022

and international operations consist of property and equipment, which are included in Other long-term assets in the Company’s consolidated balance sheet:

(in thousands)

December 31, 2024 December 31, 2023

$ 37,405 89 % $ 44,414 94 %

1 unchanged sentence

$ 41,806 100 % $ 47,279 100 %

Corporate headquarters

In February 2021, the Company agreed to accelerate its exit from its previous corporate headquarters to October 1, 2021, in exchange for a one-time payment from its landlord of $ 18 million, which was amortized over the remaining lease term.

The exit accelerated depreciation on the related leasehold improvements and reduced the Company’s future lease liabilities by $ 21.1 million and right of use assets by $ 20.3 million.

On March 31, 2021, the Company leased office space at One Main Street, Cambridge, Massachusetts, to serve as its corporate headquarters.

The Company leased office space beginning in March 2021 at One Main Street, Cambridge, Massachusetts to serve as its corporate headquarters (the “Cambridge office”).

The 4.5 year lease includes a base rent of $ 2 million per year.

Waltham office

On July 6, 2021, the Company entered into an office space lease for 131 thousand square feet in Waltham, Massachusetts.

The lease term of 11 years began on August 1, 2021.

The annual rent equals the base rent plus a portion of building operating costs and real estate taxes.

Rent first became payable on August 1, 2022.

Base rent for the first year is approximately $ 6 million and will increase by 3 % annually.

In December 2024, the Company closed the Cambridge office and relocated its corporate headquarters to office space already leased in Waltham, Massachusetts (the “Waltham office”), effective January 1, 2025.

The Company recorded a restructuring expense of $ 3.7 million as a result of closing the Cambridge office.

The Waltham office is 131 thousand square feet of leased office space located at 225 Wyman Street, Waltham, Massachusetts.

The lease term of 11 years began on August 1, 2021, with no rent due until August 1, 2022.

The annual rent equals the base rent of approximately $ 6 million, with 3 % annual increases, plus a portion of building operating costs and real estate taxes.

In addition, the Company received an improvement allowance from the landlord of $ 11.8 million.

This lease increased the Company’s lease liabilities and lease-related right of use assets by $ 42.1 million on August 1, 2021.

(in thousands) 2024 2023 2022

4 unchanged sentences

6,901 8,148 3,894

(1) The lower fixed lease costs in 2021 was due to the modification of the corporate headquarters lease.

$ 30,069 $ 30,750 $ 27,436

Right of use assets and lease liabilities

12 unchanged sentences

Weighted-average discount rate (1)

(1) The rates implicit in most of the Company’s leases are not readily determinable.

(1) The rates implicit in 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.

11 unchanged sentences

Right of use assets recognized for new leases and amendments (non-cash) $ 16,682 $ 1,460

(1) In 2022, the Company received a tenant improvement allowances of $ 8.8 million as part of the lease of the Company’s new corporate headquarters in Waltham, Massachusetts.

Convertible senior notes and capped calls

3 unchanged sentences

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 2023, the Company recognized a gain of $ 7.9 million in other income, net from repurchases of Notes representing $ 97.7 million in aggregate principal amount.

In 2024 and 2023, the Company recognized gains of $ 0.5 million and $ 7.9 million in other income, net from repurchases of Notes representing $ 34.4 million and $ 97.7 million in aggregate principal amount, respectively.

Conversion rights

3 unchanged sentences

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:

Before September 1, 2024, noteholders could 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.

1 unchanged sentence

• 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 December 31, 2023, the Notes were not eligible for conversion.

Repurchase rights

19 unchanged sentences

$ 467,864 $ 1,754 $ 469,618

$ 502,270 $ 5,651 $ 507,921

Capped call transactions

6 unchanged sentences

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.

The Capped Call Transactions are remeasured to fair value each reporting period, resulting in a non-operating gain or loss.

Change in capped call transactions:

8 unchanged sentences

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, Pegasystems Inc.

must maintain at least $ 200 million in cash, investments, and availability under the Credit Facility and the Company must maintain:

(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 December 31, 2023 and December 31, 2022, the Company had $ 27.3 million in outstanding letters of credit, reducing available borrowing capacity under the Credit Facility, but no outstanding cash borrowings.

Beginning with the fiscal quarter ended March 31, 2024, the Company must maintain 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.

Effective as of February 4, 2025, the Credit Facility was amended to extend the expiration date to February 4, 2027.

As of December 31, 2024 and December 31, 2023, the Company had $ 27.3 million in outstanding letters of credit under the Credit Facility, reducing available borrowing capacity, but no outstanding cash borrowings.

RESTRUCTURING

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

(in thousands) Three months ended Expense

Employee severance and related benefits and office space reduction

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 office space reduction

September 30, 2023 $ 17,236

Office space reduction December 31, 2023 $ 1,497

(in thousands) 2024 2023 2022

Employee severance and related benefits $ ( 614 ) $ 18,721 $ 18,549

Office space reductions (1)

5,142 3,026 3,194

$ 4,528 $ 21,747 $ 21,743

(1) These primarily relate to non-cash operating lease adjustments.

Restructuring activity:

7 unchanged sentences

(1) Included in accrued compensation and related expenses.

Office Space reductions

In 2023 and 2022, the Company incurred restructuring costs of $ 3.0 million and $ 3.2 million due to office space reductions.

FAIR VALUE MEASUREMENTS

21 unchanged sentences

$ — $ — $ 21,234 $ 21,234 $ — $ — $ 19,450 $ 19,450

(1) Included in other long-term assets.

(2) Investments in privately-held companies .

Changes in venture investments:

6 unchanged sentences

included in other income, net

included in other comprehensive income (loss)

included in other comprehensive income

( 362 ) ( 2,261 )

3 unchanged sentences

The fair value of the Notes outstanding (including the embedded conversion feature) was $ 463.9 million as of December 31, 2024 and $ 466.5 million as of December 31, 2023.

In the year ended December 31, 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.

14 unchanged sentences

In the future, the Board of Directors may terminate or modify the dividend program without prior notice.

Stock repurchases

Stock repurchase program

On April 23, 2024, the Company’s Board of Directors extended the expiration date of the share repurchase program from June 30, 2024 to June 30, 2025.

On October 22, 2024, the Company’s Board of Directors further extended the expiration date of the share repurchase program from June 30, 2025 to December 31, 2025 and increased the authorized repurchases by $ 250 million to $ 310 million as of that date.

Stock repurchase authorization activity:

(in thousands) 2024 2023 2022

3 unchanged sentences

250,000 1,925 60,000

Repurchases (2)

Repurchases paid (2)

( 809 ) ( 68,057 ) — — ( 280 ) ( 24,508 )

Repurchases unpaid at period end (2)

( 16 ) ( 1,500 ) — — — —

December 31, $ 240,443 $ 60,000 $ 58,075

(1) On April 25, 2023, the Company announced that the Board of Directors extended the current stock repurchase program’s expiration date to June 30, 2024 and increased the remaining stock repurchase authority to $ 60 million.

(1) This represents increases in the repurchase authority made by th e Board of Directors.

(2) Purchases under this program have been made on the open market.

Geographic revenue

Revenues by geography are determined based on client location:

(Dollars in thousands)

9 unchanged sentences

2024 2023 2022

Subscription license $ 407,625 $ 366,063 $ 336,248

Perpetual license 10,101 19,293 32,172

Revenue recognized at a point in time 417,726 385,356 368,420

Pega Cloud $ 558,734 $ 461,328 $ 384,271

2 unchanged sentences

Revenue recognized over time 1,095,311 1,014,890 932,489

Subscription license 398,102 407,625 366,063

Perpetual license 3,767 10,101 19,293

Revenue recognized at a point in time 401,869 417,726 385,356

$ 1,497,180 $ 1,432,616 $ 1,317,845

12 unchanged sentences

(Dollars in thousands) Subscription services Subscription license Perpetual license Consulting Total

Maintenance Pega Cloud

Pega Cloud Maintenance

1 year or less

7 unchanged sentences

(Dollars in thousands) Subscription services Subscription license Perpetual license Consulting Total

Maintenance Pega Cloud

Pega Cloud Maintenance

1 year or less

14 unchanged sentences

The Company periodically grants employees stock options and restricted stock units (“RSUs”) and non-employee Directors common stock and stock options.

In 2021 and 2022, most of the Company’s stock based compensation arrangements vest over five years , with 20 % vesting after one year and the remaining 80 % vesting quarterly over the remaining four years .

In 2022, most of the Company’s stock based compensation arrangements vest over five years , with 20 % vesting after one year and the remaining 80 % vesting quarterly over the remaining four years .

Beginning in 2023, most of the Company’s stock based compensation arrangements vest over four years , with 25 % vesting after one year and the remaining 75 % vesting quarterly over the remaining three years .

36 unchanged sentences

Key inputs used to estimate the fair value of stock options include the exercise price of the award, expected term of the option, expected volatility of the Company’s common stock over the option’s expected term, risk-free interest rate over the option’s expected term, and the Company’s expected annual dividend yield.

The exercise price for stock options is greater than or equal to the shares’ fair market value at the grant date.

The exercise price for stock options is equal to the shares’ fair market value at the grant date.

The following table summarizes the Company’s fair value assumptions for stock options:

14 unchanged sentences

(4) The expected annual dividend yield is based on the weighted-average dividend yield assumptions used for options granted during the applicable period.

The following table summarizes the combined stock option activity under the Company’s stock option plans for 2023:

The following table summarizes the time-based vesting stock option activity under the Company’s stock option plans for 2024:

(in thousands) Weighted-average Exercise Price Weighted-average Remaining Contractual Term (in years) Aggregate Intrinsic Value

11 unchanged sentences

As of December 31, 2024, the Company had unrecognized stock-based compensation expense related to the unvested portion of stock options of $ 35.2 million that is expected to be recognized as expense over a weighted-average period of 1.6 years.

Performance stock options

In 2023, the Company began awarding performance stock options.

These performance stock options allow the holder to purchase a specified number of common stock shares at an exercise price equal to the shares' fair market value at the grant date.

For the performance stock options granted in 2024, 25 % can vest on the first anniversary of the grant date, and 75 % can vest on the second anniversary of the grant date, based on the achievement of specific performance conditions for 2024 and 2025, respectively, including year over year growth in Annual Contract Value and Free Cash Flow Margin.

The options expire ten years from the grant date.

The following table summarizes the Company’s performance stock option activity for 2024:

(in thousands) Weighted-average Exercise Price Weighted-average Remaining Contractual Term (in years) Aggregate Intrinsic Value

(in thousands) (1)

Performance options outstanding as of January 1, 2024

Performance options outstanding as of December 31, 2024

1,390 $ 53.20

Vested and expected to vest as of December 31, 2024 1,173 $ 53.12 8.6 $ 47,001

Exercisable as of December 31, 2024 181 $ 47.27 8.2 $ 8,304

(1) The aggregate intrinsic value of stock options as of December 31, 2024 is based on the difference between the closing price of the Company’s stock of $ 93.20 and the exercise price of the applicable stock options.

The aggregate intrinsic value of performance stock options exercised in 2024 and 2023 was $ 1.5 million and none , respectively.

As of December 31, 2024, the Company had unrecognized stock-based compensation expense related to the unvested portion of performance stock options of $ 11.0 million that is expected to be recognized as expense over a weighted-average period of 1 year.

RSUs provide the recipient a right to receive a specified number of shares of the Company’s common stock upon vesting.

The Company values its RSUs at the fair value of its common stock on the grant date, which is the closing price of its common stock on the grant date less the present value of expected dividends during the vesting period, as the recipient is not entitled to dividends during the requisite service period.

RSU grants include units issued when employees elect to receive 50 % of the employee’s target incentive compensation under the Company’s Corporate Incentive Compensation Plan (the “CICP”) in the form of RSUs instead of cash.

The weighted-average grant-date fair value for RSUs granted in 2024, 2023, and 2022 was $ 62.57 , $ 46.57 , and $ 74.50 , respectively.

20 unchanged sentences

$ 28,240 $ 29,425 $ 30,135

The components of income (loss) before provision for (benefit from) income taxes are:

The components of income (loss) before provision for income taxes are:

(in thousands) 2024 2023 2022

2 unchanged sentences

$ 142,636 $ 95,440 $ ( 161,797 )

The components of provision for (benefit from) income taxes are:

The components of provision for income taxes are:

(in thousands) 2024 2023 2022

6 unchanged sentences

Foreign ( 1,544 ) 363 ( 842 )

Total deferred provision (benefit) 363 168,890 ( 75,336 )

Total deferred (benefit) provision ( 1,544 ) 363 168,890

$ 43,447 $ 27,632 $ 183,785

2 unchanged sentences

federal income taxes at statutory rates

$ 29,954 $ 20,042 $ ( 33,977 )

Valuation allowance

( 1,504 ) ( 19,272 ) 188,258

State income taxes, net of federal benefit and tax credits

1,297 4,117 ( 2,433 )

Permanent differences

786 435 11,561

Federal research and experimentation credits

( 4,888 ) ( 3,709 ) ( 5,012 )

Tax effects of foreign activities

( 7,817 ) 658 3,770

GILTI, FDII, and BEAT

13,945 14,022 16,390

Provision to return adjustments

121 ( 3,728 ) ( 6,317 )

Non-deductible compensation

10,933 6,818 4,769

Excess tax detriments / (benefits) related to share-based compensation

5,917 1,850 5,673

Excess tax (benefits) / detriments related to share-based compensation

( 5,645 ) 4,666 1,563

Impact of change in tax law

Other 7 333 6

— 1,726 ( 793 )

$ 43,447 $ 27,632 $ 183,785

The effective income tax rate in 2024 was primarily driven by the valuation allowance on our deferred tax assets and tax expense in the U.S.

and U.K., partially offset by available tax attributes.

Deferred income taxes

4 unchanged sentences

Accruals and reserves 57,312 41,323

Interest expense carryforward — 208

Software revenue 454 3,186

Convertible senior notes 355 2,645

Depreciation — 3,698

Tax credit carryforwards 10,441 28,456

13 unchanged sentences

The Company’s deferred tax valuation allowance requires significant judgment and has uncertainties, including assumptions about future taxable income based on historical and projected information .

On a quarterly basis, the Company reassesses the need for a valuation allowance on its existing net deferred tax assets by tax-paying jurisdiction, weighing positive and negative evidence to assess its recoverability.

In making such a determination, the Company considers all available and objectively verifiable negative and positive evidence, including future reversals of existing taxable temporary differences, projected future taxable income inclusive of the impact of enacted legislation, tax-planning strategies, and results of recent operations.

The weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified.

The Company determined that the objectively and verifiable negative evidence outweighed the positive evidence and as such intends to maintain a full valuation allowance on its U.S and U.K deferred tax assets until there is sufficient evidence to support the realization of these deferred tax assets.

Accordingly, the Company recorded a valuation allowance of $ 196.9 million at December 31, 2023.

As of December 31, 2023, the Company’s U.S.

net operating losses and credit carryforwards are:

(in thousands)

Federal State

Net operating losses (1)

$ 20,624 $ 8,766

Net operating losses due to acquisitions (1)

$ 20,624 $ 2,195

Credit carryforwards (2)

$ 26,464 $ 3,435

Credit carryforwards due to acquisitions $ 640 $ 60

(1) Excludes federal and state net operating losses of $ 16.1 million and $ 0.8 million, respectively, from prior acquisitions that the Company expects will expire unutilized.

(2) Excludes federal and state tax credits of $ 0.1 million and $ 10.7 million, respectively, that the Company expects will expire unutilized.

The Company’s federal carryforward losses and credits expire between 2024 and 2041, except for $ 1.4 million of state credits, which has an unlimited carryforward period.

The Company’s U.K.

net operating loss carryforwards were $ 183.1 million and $ 217.3 million at December 31, 2023 and 2022, respectively, which have indefinite carryforward periods.

In assessing the Company’s ability to realize its net deferred tax assets, the Company considered various factors including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial results to determine whether it is more likely than not that some portion or all of its net deferred tax assets will not be realized.

Based upon these factors, the Company has determined that the uncertainty regarding the realization of these assets is sufficient to warrant the need for a full valuation allowance against its net U.S.

deferred tax assets as of December 31, 2024.

Accordingly, the Company maintained a valuation allowance of $ 195.3 million at December 31, 2024, a decrease of $ 1.6 million as a result of the operations of its entities throughout the year.

Given the Company’s recent earnings, the Company believes that there is a reasonable possibility that in a future period sufficient positive evidence may become available to allow the Company to reach a conclusion that a substantial portion of the valuation allowance will no longer be needed.

However, the exact timing and amount of the valuation allowance release are subject to significant judgement.

Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded.

The Company had approximately $ 5.4 million and $ 8.8 million of post apportionment state net operating loss carryforwards, as of December 31, 2024 and 2023, respectively.

state losses expire at various times through 2044.

Additionally, as of December 31, 2024, the Company had $ 10.4 million of state tax credit carryforwards.

The Company’s federal net operating loss carryforwards were approximately $ 14.2 million and $ 20.6 million at December 31, 2024 and 2023, respectively.

These federal carryforward losses and state credits expire between 2025 and 2039, except for $ 1.2 million of federal net operating losses and $ 1 million of state credits, which have an unlimited carryforward period.

The Company’s UK net operating loss carryforwards were approximately $ 147.9 million and $ 183.1 million at December 31, 2024 and 2023, respectively, which have indefinite carryforward periods.

Uncertain tax benefits

9 unchanged sentences

$ 37,886 $ 30,655 $ 19,746

Due to the valuation allowance on the U.S.

deferred tax assets, the Company does not expect the unrecognized tax benefits to materially impact the Company’s effective tax rate if recognized.

The total amount of accrued liabilities related to uncertain tax positions that would affect the Company's effective tax rate, if recognized, is $ 12.9 million as of December 31, 2024.

Tax examinations

21 unchanged sentences

Stock options 2,710 794 —

RSUs 1,445 723 —

Effect of dilutive securities 4,369 1,752 —

1 unchanged sentence

89,634 84,914 81,947

Earnings (loss) per share, diluted $ 0.73 $ ( 4.22 ) $ ( 0.77 )

Earnings per share, diluted $ 1.11 $ 0.73 $ ( 4.22 )

Outstanding anti-dilutive stock options and RSUs (4)

148 250 3,367

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

(1) All dilutive securities are excluded when 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.

3 unchanged sentences

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 earnings (loss) per share.

(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 earnings per share.

These awards may be dilutive in the future.

5 unchanged sentences

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 December 31, 2023 and December 31, 2022.

The Company had no accrued losses for litigation for the below matters as of December 31, 2024 and December 31, 2023.

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.

The Company is a defendant in litigation brought by Appian in the Circuit Court of Fairfax County, Virginia (the “Court”) titled Appian Corp.

Pegasystems Inc.

6 unchanged sentences

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.

A panel of the Court of Appeals of Virginia heard oral arguments on November 15, 2023, and will issue a written opinion in the future.

A panel of the Court of Appeals of Virginia heard oral arguments on November 15, 2023, and issued a written opinion on July 30, 2024.

The Court of Appeals reversed the judgment on Appian’s Virginia Uniform Trade Secrets Act claim and ordered a new trial on that claim.

Appian filed a petition for appeal with the Supreme Court of Virginia on August 29, 2024, and the Company filed a response to the petition on October 21, 2024.

Under the Court’s rules, Appian is entitled to a 10-minute oral argument in support of its petition.

The Supreme Court of Virginia has scheduled that argument for February 11, 2025.

Although it is not possible to predict timing, the entirety of the appeals process could potentially take years to complete.

1 unchanged sentence

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.

PS Lit Recovery, LLC v.

Pegasystems Inc., Alan Trefler, and Kenneth Stillwell and Eminence Fund Long Master, Ltd., Eminence Fund Master, Ltd., Eminence Fund II Master, LP, Eminence Partners Long II, LP, Eminence Fund Leveraged Master, Ltd., Eminence Partners, L.P., Eminence Partners II, L.P.

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.

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.

On December 4, 2024, the shareholders representing approximately 3 % of the settlement class that opted out of the court approved settlement in the class action matter 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 “Class Action”) filed two lawsuits 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 District of Massachusetts.

The first is captioned Eminence Fund Long Master, Ltd., Eminence Fund Master, Ltd., Eminence Fund II Master, LP, Eminence Partners Long II, LP, Eminence Fund Leveraged Master, Ltd., Eminence Partners, L.P., and Eminence Partners II, L.P.

Pegasystems Inc., Alan Trefler, and Kenneth Stillwell (Case 1:24-cv-12999-WGY);

the second is captioned PS Lit Recovery, LLC v.

Pegasystems Inc., Alan Trefler, and Kenneth Stillwell (Case 1:24-cv-11220-WGY).

The complaints, which are substantially similar, generally allege, 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 complaints also assert claims for common law fraud and negligent misrepresentation, and seek unspecified damages.

The defendants’ motion to dismiss is due ten business days following the court’s entry of the parties’ stipulation coordinating the cases, which the parties filed in the court on February 4, 2025.

The Company is unable to reasonably estimate possible damages or a range of possible damages in these matters given the stage of the lawsuits and there being no specified quantum of damages sought in the complaints.

In re Pegasystems Inc., Derivative Litigation

3 unchanged sentences

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.

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 (“Consolidated Action”).

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.

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.

On December 17, 2024, the plaintiffs moved to voluntarily dismiss the Consolidated Action, and the Court granted the motion on December 18, 2024.

On February 7, 2025, the plaintiffs in the Consolidated Action filed a new complaint against the members of the Company’s board of directors, certain employees of the Company, and the Company in the United States District Court for the District of Massachusetts, captioned Mary Larkin and Dag Sagfors, derivatively on behalf of nominal defendant Pegasystems Inc.

Alan Trefler, Peter Gyenes, Richard Jones, Christopher Lafond, Dianne Ledingham, Sharon Rowlands, Leon Trefler, Larry Weber, Kenneth Stillwell, Don Schuerman, Kerim Akgonul, and Benjamin Baril, defendants, and Pegasystems Inc., nominal defendant (Case 1:25-cv-10303).

The complaint asserts against Defendants claims for breach of fiduciary duty, unjust enrichment, and violations of the Exchange Act relating to (i) the litigation brought by Appian in the Circuit Court of Fairfax County, Virginia, described above;

(ii) alleged misconduct by Company employees alleged in that litigation;

and the Class Action, described above.

On June 28, 2024, a lawsuit was filed against members of the Company’s board of directors, certain employees of the Company and the Company in the Business Litigation Section of the Superior Court in Suffolk County, Massachusetts, captioned John Dwyer and Ray Gerber, Plaintiffs, v.

Alan Trefler, Peter Gyenes, Richard Jones, Christopher Lafond, Dianne Ledingham, Sharon Rowlands, Larry Weber, Leon Trefler, Don Schuerman, Kerim Akgonul, and Benjamin Baril, Defendants, and Pegasystems Inc., Nominal Defendant (Case 2484CV01734) (“Dwyer Action”).

The complaint generally alleges the defendants breached their fiduciary duties in connection with alleged misconduct by Company employees alleged in the litigation brought by Appian in the Circuit Court of Fairfax County, Virginia, described above, and alleges damages from the approximately $ 2 billion verdict in the litigation brought by Appian in the Circuit Court of Fairfax County, Virginia, described above, the settlement of the Class Action, and litigation costs from various proceedings.

On October 18, 2024 the defendants served a motion to dismiss the complaint, which the defendants then withdrew on November 26, 2024 pending resolution of whether this complaint and the other derivative actions would be consolidated in Superior Court in Suffolk County, Massachusetts.

On November 22, 2024, a lawsuit was filed against members of the Company’s board of directors, certain employees of the Company and the Company in the Business Litigation Section of the Superior Court in Suffolk County, Massachusetts, captioned Jayne Birch and Robert Garfield, Plaintiffs, v.

Alan Trefler, Peter Gyenes, Richard Jones, Christopher Lafond, Dianne Ledingham, Sharon Rowlands, Larry Weber, Leon Trefler, Kerim Akgonul, Don Schuerman, Leon Trefler, Douglas Kim, John Petronio, Benjamin Baril, and Kenneth Stillwell, Defendants, and Pegasystems Inc., Nominal Defendant (Case 2484CV03076-BLS-1) (“Birch Action”).

The parties agreed on November 26, 2024 to suspend indefinitely the deadlines for any response to the complaint pending resolution of whether this complaint and the other derivative actions would be consolidated in the Superior Court in Suffolk County, Massachusetts.

On February 4, 2025, the parties to the Dwyer and Birch Actions filed a stipulation and proposed order in the Business Litigation Section of the Superior Court in Suffolk County, Massachusetts consolidating the two actions and setting a schedule for the filing of a consolidated complaint and any motion to dismiss.

Pursuant to the stipulation, a consolidated complaint must be filed by March 18, 2025, and any motion to dismiss must be served by May 15, 2025.

The court held a hearing on February 11, 2025, at which it indicated it would issue an order consolidating the Dwyer and Birch Actions and approving the schedule for the filing of a consolidated complaint and a motion to dismiss.

The court scheduled a hearing on the motion to dismiss for September 4, 2025.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data