3 unchanged sentences
(in thousands)
−Removed: June 30, 2025 December 31, 2024
+Added: September 30, 2025 December 31, 2024
Current assets:
31 unchanged sentences
170,545 and 172,224 shares issued and outstanding at
−Removed: June 30, 2025 and December 31, 2024, respectively
+Added: September 30, 2025 and December 31, 2024, respectively
Additional paid-in capital 370,018 526,102
8 unchanged sentences
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
2025 2024 2025 2024
19 unchanged sentences
Income (loss) from operations 14,469 ( 11,661 ) 158,737 ( 19,107 )
−Removed: Foreign currency transaction (loss) gain ( 14,008 ) 437 ( 19,333 ) ( 2,825 )
+Added: Foreign currency transaction gain (loss) 7,154 ( 4,405 ) ( 12,179 ) ( 7,230 )
Interest income 2,660 6,769 11,243 18,835
Interest expense ( 144 ) ( 1,639 ) ( 1,172 ) ( 5,047 )
−Removed: Gain (loss) on capped call transactions — ( 3,277 ) ( 223 ) 22
−Removed: Other income, net 18,729 — 19,290 1,684
−Removed: Income before (benefit from) provision for income taxes 25,247 15,255 151,557 93
+Added: (Loss) on capped call transactions — ( 689 ) ( 223 ) ( 667 )
+Added: Other (loss) income, net ( 43 ) — 19,247 1,684
+Added: Income (loss) before (benefit from) provision for income taxes 24,096 ( 11,625 ) 175,653 ( 11,532 )
(Benefit from) provision for income taxes ( 19,268 ) 2,765 16,790 8,369
11 unchanged sentences
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
2025 2024 2025 2024
Net income (loss) $ 43,364 $ ( 14,390 ) $ 158,863 $ ( 19,901 )
−Removed: Other comprehensive income (loss), net of tax
+Added: Other comprehensive (loss) income, net of tax
Unrealized gain (loss) on available-for-sale securities 89 660 11 ( 158 )
Foreign currency translation adjustments ( 4,595 ) 10,204 21,416 4,635
−Removed: Total other comprehensive income (loss), net of tax 17,385 ( 2,214 ) 25,933 ( 6,387 )
+Added: Total other comprehensive (loss) income, net of tax ( 4,506 ) 10,864 21,427 4,477
Comprehensive income (loss) $ 38,858 $ ( 3,526 ) $ 180,290 $ ( 15,424 )
22 unchanged sentences
June 30, 2024 170,738 $ 1,708 $ 472,176 $ ( 14,216 ) $ ( 24,266 ) $ 435,402
+Added: Repurchase of common stock ( 342 ) ( 3 ) ( 11,746 ) — — ( 11,749 )
+Added: Issuance of common stock for stock compensation plans 1,162 11 16,456 — — 16,467
+Added: Issuance of common stock under the employee stock purchase plan 58 — 1,789 — — 1,789
+Added: Stock-based compensation — — 37,213 — — 37,213
+Added: Cash dividends declared ($ 0.015 per share)
+Added: — — ( 2,573 ) — — ( 2,573 )
+Added: Other comprehensive income — — — — 10,864 10,864
+Added: Net (loss) — — — ( 14,390 ) — ( 14,390 )
+Added: September 30, 2024 171,616 $ 1,716 $ 513,315 $ ( 28,606 ) $ ( 13,402 ) $ 473,023
+Added: PEGASYSTEMS INC.
+Added: UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
+Added: (in thousands, except per share amounts)
+Added: Common Stock Additional paid-in capital Retained earnings Accumulated other comprehensive (loss) Total stockholders’ equity
+Added: of shares Amount
December 31, 2024 172,224 $ 1,722 $ 526,102 $ 87,901 $ ( 30,245 ) $ 585,480
17 unchanged sentences
June 30, 2025 171,102 $ 1,711 $ 431,466 $ 195,677 $ ( 4,312 ) $ 624,542
+Added: Repurchase of common stock ( 2,675 ) ( 27 ) ( 142,549 ) — — ( 142,576 )
+Added: Issuance of common stock for stock compensation plans 2,078 21 36,082 — — 36,103
+Added: Issuance of common stock under the employee stock purchase plan 40 — 1,978 — — 1,978
+Added: Stock-based compensation — — 43,041 — — 43,041
+Added: Cash dividends declared ($ 0.03 per share)
+Added: — — — ( 5,116 ) — ( 5,116 )
+Added: Other comprehensive (loss) — — — — ( 4,506 ) ( 4,506 )
+Added: Net income — — — 43,364 — 43,364
+Added: September 30, 2025 170,545 $ 1,705 $ 370,018 $ 233,925 $ ( 8,818 ) $ 596,830
See notes to unaudited condensed consolidated financial statements.
2 unchanged sentences
(in thousands)
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
Operating activities
6 unchanged sentences
Foreign currency transaction loss 12,179 7,230
−Removed: Loss (gain) on capped call transactions 223 ( 22 )
+Added: Loss on capped call transactions 223 667
Deferred income taxes 235 ( 67 )
57 unchanged sentences
MARKETABLE SECURITIES
−Removed: June 30, 2025 December 31, 2024
+Added: September 30, 2025 December 31, 2024
(in thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Amortized Cost Unrealized Gains Unrealized Losses Fair Value
2 unchanged sentences
$ 202,192 $ 572 $ ( 101 ) $ 202,663 $ 402,948 $ 64 $ ( 142 ) $ 402,870
−Removed: As of June 30, 2025, marketable securities’ maturities ranged from July 2025 to June 2028, with a weighted-average remaining maturity of 1.4 years.
+Added: As of September 30, 2025, marketable securities’ maturities ranged from October 2025 to September 2028, with a weighted-average remaining maturity of 1.4 years.
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE
(in thousands)
−Removed: June 30, 2025 December 31, 2024
+Added: September 30, 2025 December 31, 2024
Accounts receivable, net $ 160,919 $ 305,468
10 unchanged sentences
(Dollars in thousands)
−Removed: June 30, 2025
+Added: September 30, 2025
1 year or less $ 175,732 62 %
4 unchanged sentences
(Dollars in thousands)
−Removed: June 30, 2025
+Added: September 30, 2025
2025 $ 135,540 48 %
6 unchanged sentences
Clients that represented 10% or more of the Company’s total accounts receivable and unbilled receivables:
−Removed: June 30, 2025 December 31, 2024
+Added: September 30, 2025 December 31, 2024
Accounts receivable * 20 %
8 unchanged sentences
(in thousands)
−Removed: June 30, 2025 December 31, 2024
+Added: September 30, 2025 December 31, 2024
Contract assets (1)
8 unchanged sentences
(in thousands)
−Removed: June 30, 2025 December 31, 2024
+Added: September 30, 2025 December 31, 2024
Deferred revenue $ 404,757 $ 423,910
2 unchanged sentences
(1) Included in other long-term liabilities.
−Removed: The change in deferred revenue during the six months ended June 30, 2025 was primarily due to new billings in advance of revenue recognition and $ 303.6 million of revenue recognized during the period included in deferred revenue as of December 31, 2024.
+Added: The change in deferred revenue during the nine months ended September 30, 2025 was primarily due to new billings in advance of revenue recognition and $ 384 million of revenue recognized during the period included in deferred revenue as of December 31, 2024.
PEGASYSTEMS INC.
2 unchanged sentences
(in thousands)
−Removed: June 30, 2025 December 31, 2024
+Added: September 30, 2025 December 31, 2024
Deferred commissions (1)
2 unchanged sentences
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
(in thousands) 2025 2024 2025 2024
3 unchanged sentences
GOODWILL AND OTHER INTANGIBLES
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
(in thousands)
1 unchanged sentence
Currency translation adjustments 289 ( 43 )
−Removed: June 30, $ 81,538 $ 81,410
+Added: September 30, $ 81,402 $ 81,568
Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives.
−Removed: June 30, 2025
+Added: September 30, 2025
(in thousands) Useful Lives Cost Accumulated Amortization Net Book Value (1)
16 unchanged sentences
Future estimated amortization of intangible assets:
−Removed: (in thousands) June 30, 2025
+Added: (in thousands) September 30, 2025
Remainder of 2025 $ 627
1 unchanged sentence
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
(in thousands) 2025 2024 2025 2024
8 unchanged sentences
Other current assets
−Removed: (in thousands) June 30, 2025 December 31, 2024
+Added: (in thousands) September 30, 2025 December 31, 2024
Prepaid expenses $ 39,970 $ 38,155
7 unchanged sentences
Other long-term assets
−Removed: (in thousands) June 30, 2025 December 31, 2024
+Added: (in thousands) September 30, 2025 December 31, 2024
Deferred commissions $ 99,423 $ 105,405
10 unchanged sentences
Accrued expenses
−Removed: (in thousands) June 30, 2025 December 31, 2024
+Added: (in thousands) September 30, 2025 December 31, 2024
Cloud hosting $ 16,445 $ 1,802
7 unchanged sentences
Other current liabilities
−Removed: (in thousands) June 30, 2025 December 31, 2024
+Added: (in thousands) September 30, 2025 December 31, 2024
Operating lease liabilities $ 14,424 $ 14,551
3 unchanged sentences
Other long-term liabilities
−Removed: (in thousands) June 30, 2025 December 31, 2024
+Added: (in thousands) September 30, 2025 December 31, 2024
Deferred revenue $ 2,457 $ 2,121
13 unchanged sentences
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
(in thousands) 2025 2024 2025 2024
9 unchanged sentences
Net income (loss) $ 43,364 $ ( 14,390 ) $ 158,863 $ ( 19,901 )
−Removed: (1) Includes Litigation settlement, net of recoveries, Restructuring, Foreign currency transaction (loss) gain, Interest income, Interest expense, Gain (loss) on capped call transactions, and Other income, net.
+Added: (1) Includes Litigation settlement, net of recoveries, Restructuring, Foreign currency transaction gain (loss), Interest income, Interest expense, (Loss) on capped call transactions, and Other (loss) income, net.
Long-lived assets related to the Company’s U.S.
1 unchanged sentence
(in thousands)
−Removed: June 30, 2025 December 31, 2024
+Added: September 30, 2025 December 31, 2024
$ 37,433 87 % $ 37,405 89 %
3 unchanged sentences
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
(in thousands) 2025 2024 2025 2024
4 unchanged sentences
Right of use assets and lease liabilities
−Removed: (in thousands) June 30, 2025 December 31, 2024
+Added: (in thousands) September 30, 2025 December 31, 2024
Right of use assets (1)
8 unchanged sentences
Weighted-average remaining lease term and discount rate for the Company’s leases were:
−Removed: June 30, 2025 December 31, 2024
+Added: September 30, 2025 December 31, 2024
Weighted-average remaining lease term 5.7 years 6.2 years
4 unchanged sentences
Maturities of lease liabilities:
−Removed: (in thousands) June 30, 2025
+Added: (in thousands) September 30, 2025
Remainder of 2025 $ 4,615
4 unchanged sentences
Cash flow information
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
(in thousands) 2025 2024
10 unchanged sentences
Carrying value of the Notes:
−Removed: (in thousands) June 30, 2025 December 31, 2024
+Added: (in thousands) September 30, 2025 December 31, 2024
Principal $ — $ 467,864
3 unchanged sentences
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
(in thousands) 2025 2024 2025 2024
6 unchanged sentences
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
−Removed: The average interest rate on the Notes during the three months ended March 31, 2025 and six months ended June 30, 2024 was 1.2 %.
+Added: The average interest rate on the Notes during the three months ended March 31, 2025 and nine months ended September 30, 2024 was 1.2 %.
Capped call transactions
3 unchanged sentences
Change in capped call transactions:
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
(in thousands) 2025 2024
1 unchanged sentence
Fair value adjustment ( 223 ) ( 667 )
−Removed: June 30, $ — $ 915
+Added: September 30, $ — $ 226
Credit facility
5 unchanged sentences
Effective as of February 4, 2025, the Credit Facility was amended to extend the expiration date to February 4, 2027.
−Removed: As of June 30, 2025 and December 31, 2024, the Company had letters of credit of $ 26.7 million and $ 27.3 million, respectively, under the Credit Facility, however had no cash borrowings.
+Added: As of September 30, 2025, the Company is compliant with all Credit Facility covenants.
+Added: As of September 30, 2025 and December 31, 2024, the Company had letters of credit of $ 26.7 million and $ 27.3 million, respectively, under the Credit Facility, however had no cash borrowings.
RESTRUCTURING
1 unchanged sentence
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
(in thousands) 2025 2024 2025 2024
−Removed: Employee (benefit) severance and related costs
+Added: Employee severance and related costs
$ ( 11 ) $ ( 397 ) $ ( 68 ) $ ( 634 )
6 unchanged sentences
Accrued employee severance and related costs:
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
(in thousands) 2025 2024
January 1, $ 2,000 $ 8,095
−Removed: (Benefit) costs incurred ( 57 ) ( 238 )
+Added: Costs incurred ( 68 ) ( 634 )
Cash disbursements ( 1,681 ) ( 4,214 )
Currency translation adjustments 115 ( 93 )
+Added: September 30, (1)
$ 366 $ 3,154
18 unchanged sentences
Assets and liabilities measured at fair value on a recurring basis:
−Removed: June 30, 2025 December 31, 2024
+Added: September 30, 2025 December 31, 2024
(in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
5 unchanged sentences
Changes in venture investments:
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
(in thousands) 2025 2024
4 unchanged sentences
Changes in fair value:
−Removed: included in other income, net
+Added: included in other (loss) income, net
included in other comprehensive income (loss)
( 535 ) ( 362 )
−Removed: June 30, $ 18,651 $ 21,047
+Added: September 30, $ 20,214 $ 21,172
During the three months ended June 30, 2025, one of the Company’s investees was acquired by a privately held company.
−Removed: As a result, the Company received $ 33.2 million in consideration for its equity interest in the investee, composed of $ 22.1 million cash and $ 11.1 million of an ownership interest in the privately held company, and recognized a $ 18.7 million gain in excess of cost in other income, net on the condensed consolidated statements of operations.
+Added: As a result, the Company received $ 33.2 million in consideration for its equity interest in the investee, composed of $ 22.1 million cash and $ 11.1 million of an ownership interest in the privately held company, and recognized a $ 18.7 million gain in excess of cost in other (loss) income, net on the condensed consolidated statements of operations.
The carrying value of certain financial instruments, including receivables and accounts payable, approximates fair value due to their short maturities.
8 unchanged sentences
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
(Dollars in thousands)
8 unchanged sentences
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
(in thousands)
9 unchanged sentences
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
(in thousands) 2025 2024 2025 2024
11 unchanged sentences
Expected future revenue from existing non-cancellable contracts:
−Removed: As of June 30, 2025:
+Added: As of September 30, 2025:
(Dollars in thousands) Subscription services Subscription license Perpetual license Consulting Total
7 unchanged sentences
$ 1,288,709 $ 360,434 $ 58,598 $ 158 $ 46,627 $ 1,754,526 100 %
−Removed: As of June 30, 2024:
+Added: As of September 30, 2024:
(Dollars in thousands) Subscription services Subscription license Perpetual license Consulting Total
10 unchanged sentences
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
(in thousands) 2025 2024 2025 2024
10 unchanged sentences
$ ( 547 ) $ ( 512 ) $ ( 1,700 ) $ ( 1,377 )
−Removed: As of June 30, 2025, the Company had $ 134.4 million of unrecognized stock-based compensation expense, net of estimated forfeitures, which is expected to be recognized over a weighted-average period of 1.6 years.
−Removed: Six Months Ended
−Removed: June 30, 2025
+Added: As of September 30, 2025, the Company had $ 129 million of unrecognized stock-based compensation expense, net of estimated forfeitures, which is expected to be recognized over a weighted-average period of 1.8 years.
+Added: Nine Months Ended
+Added: September 30, 2025
(in thousands) Quantity
8 unchanged sentences
(2) Performance stock options allow the holder to purchase a specified number of Common Stock shares at an exercise price equal to or greater than the shares' fair market value at the grant date.
−Removed: The performance stock options granted in the six months ended June 30, 2025 vest quarterly over two years , beginning after the achievement of specific performance conditions.
+Added: The performance stock options granted in the nine months ended September 30, 2025 vest quarterly over two years , beginning after the achievement of specific performance conditions.
The options expire ten years from the grant date.
2 unchanged sentences
Stock repurchase program
−Removed: On April 22, 2025, the Company’s Board of Directors extended the expiration date of the share repurchase program from December 31, 2025 to June 30, 2026 and increased the authorized repurchase amount by $ 500 million, bringing the total repurchase authorization to $ 810 million, of which $ 489.3 million remains available as of June 30, 2025.
−Removed: During the six months ended June 30, 2025, the Company repurchased 6.1 million of its common stock for $ 251.2 million at an average price per share of $ 41.39 .
+Added: On April 22, 2025, the Company’s Board of Directors extended the expiration date of the share repurchase program from December 31, 2025 to June 30, 2026 and increased the authorized repurchase amount by $ 500 million, bringing the total repurchase authorization to $ 810 million, of which $ 347.3 million remains available as of September 30, 2025.
+Added: During the nine months ended September 30, 2025, the Company repurchased 8.7 million of its common stock for $ 393.2 million at an average price per share of $ 44.97 .
+Added: The share repurchase and authorization amounts disclosed within this Form 10-Q exclude the U.S.
+Added: excise tax on share repurchases.
All purchases under this program have been made on the open market.
3 unchanged sentences
Effective income tax rate
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
(Dollars in thousands) 2025 2024
1 unchanged sentence
Effective income tax rate 10 % ( 73 ) %
−Removed: * Not meaningful
−Removed: The Company’s effective income tax rate for the six months ended June 30, 2025, is mainly attributable to the jurisdictional mix of earnings and is also impacted by excess tax benefits from stock-based compensation and the valuation allowance on its deferred tax assets in the U.S.
+Added: The Company’s effective income tax rate for the nine months ended September 30, 2025, was impacted by excess tax benefits from stock-based compensation, and by the enactment of the One Big Beautiful Bill Act (“OBBBA”) on July 4, 2025.
+Added: The OBBBA introduced several U.S.
+Added: tax law changes, including the ability to immediately expense domestic research and experimental (“R&E”) expenditures starting in 2025, and an election to accelerate any unamortized domestic R&E expenditures over a one or two year period beginning with the 2025 tax year.
+Added: In accordance with ASC 740, Accounting for Income Taxes , the impacts of the OBBBA are reflected in the Company’s results for the quarter ended September 30, 2025.
+Added: The enactment of the OBBBA reduced the Company’s forecasted U.S.
+Added: income tax expense for 2025.
+Added: However, the changes did not affect the Company’s U.S.
+Added: deferred tax assets or liabilities, as the Company continues to maintain a full valuation allowance against those balances.
The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized.
4 unchanged sentences
net deferred tax assets until positive sufficient evidence exists to support their realization.
−Removed: 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.
−Removed: However, the exact timing and amount of the valuation allowance release are subject to significant judgement.
+Added: Given the Company’s recent earnings, the Company believes that there is a reasonable possibility that in a near 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.
+Added: However, the exact timing and amount of the valuation allowance release are subject to significant judgment.
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.
−Removed: On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law.
−Removed: The OBBBA provides for significant U.S.
−Removed: tax law changes.
−Removed: ASC 740, Accounting for Income Taxes , provides that changes in tax rates and laws are recognized in the period of enactment.
−Removed: As a result, the Company is assessing the impact of this new legislation and will record any impacts in the period of enactment.
PEGASYSTEMS INC.
5 unchanged sentences
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
(in thousands, except per share amounts) (1)
28 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.
−Removed: The Company had no accrued losses for litigation for the below matters as of June 30, 2025 and December 31, 2024.
+Added: The Company had no accrued losses for litigation for the below matters as of September 30, 2025 and December 31, 2024.
PEGASYSTEMS INC.
14 unchanged sentences
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.
−Removed: The Supreme Court of Virginia heard oral argument on February 11, 2025, and, on March 7, 2025, the Supreme Court of Virginia granted Appian’s petition for appeal and Pega’s assignments of cross-error.
+Added: On March 7, 2025, the Supreme Court of Virginia granted Appian’s petition for appeal and Pega’s assignments of cross-error.
The parties have completed briefing before the Supreme Court of Virginia.
−Removed: There is no date for oral argument.
−Removed: Although it is not possible to predict timing, the entirety of the appeals process could potentially take years to complete.
+Added: The Supreme Court of Virginia is scheduled to hear oral argument on the parties’ substantive appellate briefs on October 28, 2025.
The Company continues to believe that it did not misappropriate any alleged trade secrets and that its sales of the Company’s products at issue were not caused by, or the result of, any alleged misappropriation of trade secrets.
28 unchanged sentences
On April 14, 2025, the court granted the parties’ joint stipulations to stay both cases pending the resolution of the parallel federal actions and ordered the plaintiffs to file periodic status reports regarding the federal cases showing cause why the state cases should remain open.
−Removed: 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.
+Added: The Company believes it has strong defenses to the claims brought against the defendants and intends to defend against these claims vigorously.
+Added: The Company is unable to reasonably estimate possible damages or a range of possible damages in these matters given the stage of the lawsuits.
+Added: In re Pegasystems Inc., Derivative Litigation
+Added: Federal court cases
PEGASYSTEMS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
−Removed: In re Pegasystems Inc., Derivative Litigation
On November 21, 2022, a lawsuit was filed against the members of the Company’s board of directors, the Company’s chief operating and financial officer and the Company in the United States District Court for the District of Massachusetts, captioned Mary Larkin, derivatively on behalf of nominal defendant Pegasystems Inc.
Peter Gyenes, Richard Jones, Christopher Lafond, Dianne Ledingham, Sharon Rowlands, Alan Trefler, Larry Weber, and Kenneth Stillwell, defendants, and Pegasystems Inc., nominal defendant (Case 1:22-cv-11985).
−Removed: The complaint generally alleges the defendants sold shares of the Company while in possession of material nonpublic information relating to (i) the litigation brought by Appian in the Circuit Court of Fairfax County, Virginia, described above, and (ii) alleged misconduct by Company employees alleged in that litigation.
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.
−Removed: 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”).
−Removed: The Company also has received confidential demand letters raising substantially the same allegations set forth in the foregoing derivative complaints.
+Added: On May 17, 2023, the Larkin and Sagfors cases were consolidated (the “Consolidated Action”) and, after defendants moved to dismiss the complaint in the Consolidated Action on December 4, 2024, the plaintiffs moved to voluntarily dismiss the Consolidated Action, and the Court granted the motion to dismiss on December 18, 2024.
+Added: The Company separately received confidential demand letters raising substantially the same allegations set forth in the Consolidated Action.
On April 12, 2023, the Company’s board of directors (other than Mr.
−Removed: 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.
−Removed: On December 4, 2024, the defendants moved to dismiss the complaint in the Consolidated Action.
−Removed: On December 17, 2024, the plaintiffs moved to voluntarily dismiss the Consolidated Action, and the Court granted the motion on December 18, 2024.
+Added: 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) were 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 “Demand Review Committee”).
+Added: The Demand Review Committee, with the assistance of independent legal counsel, conducted an extensive investigation of the allegations raised in the demand letters and on October 7, 2024 issued a report concluding that there are no valid claims against the Company’s directors and officers with respect to the matters raised in the demands and that it would not be in the Company’s best interests to pursue litigation against them.
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.
−Removed: 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).
+Added: 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, (the “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;
2 unchanged sentences
The Defendants filed motions to dismiss the complaint on April 28, 2025.
−Removed: The plaintiffs filed a brief in opposition to the motions to dismiss on June 9, 2025, and the defendants filed a reply brief in support of their motions to dismiss on June 30, 2025.
−Removed: The Court has scheduled a hearing on the motions to dismiss for July 21, 2025.
On June 6, 2025, the plaintiffs in the consolidated derivative matter currently pending in Massachusetts Superior Court, Case No.
2484CV01734 (discussed below), moved to intervene in this matter and to stay it pending the resolution of the state derivative matter.
−Removed: After briefing by the parties, the Court scheduled a hearing on the motions for July 21, 2025.
+Added: The Court held a hearing on defendants’ motions to dismiss and state court plaintiffs’ motion to intervene on July 21, 2025.
+Added: Following argument, the Court took the motions under advisement.
+Added: On October 14, 2025, the parties jointly notified the Court that on October 2, 2025 the Massachusetts Superior Court granted defendants’ motion to dismiss the related state court derivative action (see below) and proposed that the Court refrain from issuing a decision on the motions to dismiss pending a joint submission by the parties of their respective positions on the impact of the state court dismissal on the federal court case within thirty (30) days.
+Added: The Company believes it has strong defenses to the claims brought against the defendants and intends to defend against these claims vigorously.
+Added: 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.
+Added: State court cases
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.
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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.
−Removed: 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.
−Removed: 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”).
−Removed: 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.
−Removed: 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.
+Added: Alan Trefler, Peter Gyenes, Richard Jones, Christopher Lafond, Dianne Ledingham, Sharon Rowlands, Larry Weber, 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”).
+Added: The complaint generally asserts the same claims asserted in the Dwyer Action.
PEGASYSTEMS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
−Removed: 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.
−Removed: On February 12, 2025, an order was entered consolidating the Dwyer and Birch Actions and approving the schedule for the filing of a consolidated complaint and a motion to dismiss.
+Added: On February 12, 2025, after submission by the parties of a stipulation and proposed order, an order was entered consolidating the Dwyer and Birch Actions and approving the schedule for the filing of a consolidated complaint and a motion to dismiss.
On March 14, 2025, the plaintiffs filed a consolidated complaint in Case No.
The consolidated 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 in connection with the investigation conducted and the report issued by the Demand Review Committee of the Company’s board regarding the same.
−Removed: The defendants served motions to dismiss the complaint on May 15, 2025, and the plaintiffs served a brief in opposition to the motions to dismiss on July 11, 2025.
−Removed: Defendants’ reply briefs in support of their motions to dismiss are due on August 1, 2025.
−Removed: The court scheduled a hearing on the motion to dismiss for September 4, 2025.
−Removed: 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.
+Added: The Defendants moved to dismiss the complaint and after briefing by the parties, the Court held a hearing on defendants’ motion on September 4, 2025.
+Added: On October 2, 2025, the Court granted Defendants’ motion to dismiss and the parties’ are awaiting entry of a judgment of dismissal.
+Added: The Company believes it has strong defenses to the claims brought against the defendants and intends to defend against these claims vigorously.
+Added: The Company is unable to reasonably estimate possible damages or a range of possible damages in these matters given the stage of the lawsuits.
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.