What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-07-21 compared with 2026-04-21 · 100 added, 98 removed, 604 unchanged (25% of the section changed)

3 unchanged sentences

(in thousands)

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Current assets:

32 unchanged sentences

164,358 and 170,347 shares issued and outstanding at

March 31, 2026 and December 31, 2025, respectively

June 30, 2026 and December 31, 2025, respectively

Additional paid-in capital 72,300 330,926

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Subscription services $ 288,462 $ 246,014 $ 568,810 $ 473,505

15 unchanged sentences

Income from operations 16,636 17,279 53,785 144,268

Foreign currency transaction gain (loss) 1,850 ( 5,325 )

Foreign currency transaction (loss) gain ( 1,364 ) ( 14,008 ) 486 ( 19,333 )

Interest income 2,500 3,248 5,454 8,583

1 unchanged sentence

(Loss) on capped call transactions — — — ( 223 )

Other (loss) income, net ( 2,204 ) 561

Income before provision for income taxes 39,705 126,310

Provision for income taxes 6,941 40,888

Other income (loss), net 786 18,729 ( 1,418 ) 19,290

Income before provision for (benefit from) income taxes 18,513 25,247 58,218 151,557

Provision for (benefit from) income taxes 5,179 ( 4,830 ) 12,120 36,058

Net income $ 13,334 $ 30,077 $ 46,098 $ 115,499

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Net income $ 13,334 $ 30,077 $ 46,098 $ 115,499

Other comprehensive (loss) income, net of tax

Unrealized (loss) on available-for-sale securities ( 739 ) ( 262 )

Other comprehensive income (loss), net of tax

Unrealized (loss) gain on available-for-sale securities ( 79 ) 184 ( 818 ) ( 78 )

Foreign currency translation adjustments 894 17,201 ( 3,598 ) 26,011

Total other comprehensive (loss) income, net of tax ( 5,231 ) 8,548

Total other comprehensive income (loss), net of tax 815 17,385 ( 4,416 ) 25,933

Comprehensive income $ 14,149 $ 47,462 $ 41,682 $ 141,432

15 unchanged sentences

March 31, 2025 171,124 $ 1,712 $ 460,498 $ 170,756 $ ( 21,697 ) $ 611,269

Repurchase of common stock ( 3,147 ) ( 31 ) ( 132,454 ) — — ( 132,485 )

Issuance of common stock for stock compensation plans 3,086 30 64,876 — — 64,906

Issuance of common stock under the employee stock purchase plan 39 — 1,816 — — 1,816

Stock-based compensation — — 36,730 — — 36,730

Cash dividends declared ($ 0.03 per share)

— — — ( 5,156 ) — ( 5,156 )

Other comprehensive income — — — — 17,385 17,385

Net income — — — 30,077 — 30,077

June 30, 2025 171,102 $ 1,711 $ 431,466 $ 195,677 $ ( 4,312 ) $ 624,542

December 31, 2025 170,347 $ 1,703 $ 330,926 $ 463,389 $ ( 8,637 ) $ 787,381

8 unchanged sentences

March 31, 2026 168,768 $ 1,688 $ 227,005 $ 491,090 $ ( 13,868 ) $ 705,915

Repurchase of common stock ( 5,335 ) ( 53 ) ( 201,565 ) — — ( 201,618 )

Issuance of common stock for stock compensation plans 855 8 8,856 — — 8,864

Issuance of common stock under the employee stock purchase plan 70 1 1,778 — — 1,779

Stock-based compensation — — 36,226 — — 36,226

Cash dividends declared ($ 0.03 per share)

— — — ( 4,931 ) — ( 4,931 )

Other comprehensive income — — — — 815 815

Net income — — — 13,334 — 13,334

June 30, 2026 164,358 $ 1,644 $ 72,300 $ 499,493 $ ( 13,053 ) $ 560,384

See notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Operating activities

27 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 2,299 ) 7,407

Net increase (decrease) in cash, cash equivalents, and restricted cash 57,950 ( 106,293 )

Net (decrease) in cash, cash equivalents, and restricted cash ( 27,272 ) ( 135,418 )

Cash, cash equivalents, and restricted cash, beginning of period 216,360 341,529

8 unchanged sentences

Dividends payable $ 4,931 $ 5,156

Right of use assets obtained in exchange for operating lease obligations $ 2,664 $ 3,077

excise tax payable on net stock repurchase $ 2,462 $ —

24 unchanged sentences

MARKETABLE SECURITIES

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

(in thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Amortized Cost Unrealized Gains Unrealized Losses Fair Value

2 unchanged sentences

$ 177,303 $ 59 $ ( 565 ) $ 176,797 $ 213,033 $ 431 $ ( 112 ) $ 213,352

As of March 31, 2026, marketable securities’ maturities ranged from April 2026 to March 2029, with a weighted-average remaining maturity of 1.3 years.

As of June 30, 2026, marketable securities’ maturities ranged from July 2026 to June 2029, with a weighted-average remaining maturity of 2.0 years.

RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE

(in thousands)

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Accounts receivable, net $ 143,213 $ 264,713

10 unchanged sentences

(Dollars in thousands)

March 31, 2026

June 30, 2026

1 year or less $ 154,029 66 %

4 unchanged sentences

(Dollars in thousands)

March 31, 2026

June 30, 2026

2026 $ 56,216 24 %

7 unchanged sentences

(in thousands)

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Contract assets (1)

8 unchanged sentences

(in thousands)

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Deferred revenue $ 462,532 $ 509,275

2 unchanged sentences

(1) Included in other long-term liabilities.

The change in deferred revenue during the three months ended March 31, 2026 was primarily due to new billings in advance of revenue recognition and $ 225.6 million of revenue recognized during the period included in deferred revenue as of December 31, 2025.

The change in deferred revenue during the six months ended June 30, 2026 was primarily due to new billings in advance of revenue recognition and $ 365.4 million of revenue recognized during the period included in deferred revenue as of December 31, 2025.

DEFERRED COMMISSIONS

(in thousands)

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Deferred commissions (1)

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands) 2026 2025 2026 2025

4 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Three Months Ended

Six Months Ended

(in thousands)

1 unchanged sentence

Currency translation adjustments ( 241 ) 425

March 31, $ 81,380 $ 81,186

June 30, $ 81,265 $ 81,538

OTHER ASSETS AND LIABILITIES

Other current assets

(in thousands) March 31, 2026 December 31, 2025

(in thousands) June 30, 2026 December 31, 2025

Prepaid expenses $ 48,002 $ 65,293

1 unchanged sentence

Contract assets 15,718 17,678

Indirect tax receivable 2,410 2,172

Restricted cash 2,448 1,577

Indirect tax receivable 2,135 2,172

Other 2,903 3,050

1 unchanged sentence

Other long-term assets

(in thousands) March 31, 2026 December 31, 2025

(in thousands) June 30, 2026 December 31, 2025

Deferred commissions $ 90,133 104,574

9 unchanged sentences

Accrued expenses

(in thousands) March 31, 2026 December 31, 2025

(in thousands) June 30, 2026 December 31, 2025

Outside professional services $ 35,182 $ 15,233

1 unchanged sentence

Litigation settlements 9,750 9,750

Marketing and sales program 7,612 1,519

Income and other taxes 7,381 7,273

Employee related 5,890 5,464

Marketing and sales program 3,549 1,519

Other 6,467 4,544

1 unchanged sentence

Other current liabilities

(in thousands) March 31, 2026 December 31, 2025

(in thousands) June 30, 2026 December 31, 2025

Operating lease liabilities $ 15,020 $ 15,142

5 unchanged sentences

Other long-term liabilities

(in thousands) March 31, 2026 December 31, 2025

(in thousands) June 30, 2026 December 31, 2025

Income taxes payable $ 24,828 $ 23,331

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands) 2026 2025 2026 2025

7 unchanged sentences

858 ( 8,012 ) ( 1,851 ) ( 7,322 )

Provision for income taxes 6,941 40,888

Provision for (benefit from) income taxes 5,179 ( 4,830 ) 12,120 36,058

Net income $ 13,334 $ 30,077 $ 46,098 $ 115,499

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

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

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

1 unchanged sentence

(in thousands)

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

$ 41,965 79 % $ 40,060 89 %

1 unchanged sentence

$ 53,309 100 % $ 45,240 100 %

Three Months Ended

(in thousands) 2026 2025

Fixed lease costs $ 4,386 $ 3,776

Short-term lease costs 715 487

Variable lease costs 1,995 1,750

$ 7,096 $ 6,013

PEGASYSTEMS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Right of use assets and lease liabilities

(in thousands) March 31, 2026 December 31, 2025

Right of use assets (1)

$ 57,675 $ 60,574

Operating lease liabilities (2)

$ 15,052 $ 15,142

Long-term operating lease liabilities $ 57,075 $ 60,825

(1) Included in other long-term assets.

(2) Included in other current liabilities.

Weighted-average remaining lease term and discount rate for the Company’s leases were:

March 31, 2026 December 31, 2025

Weighted-average remaining lease term 5.2 years 5.4 years

Weighted-average discount rate (1)

(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.

The incremental borrowing rate represents an estimate of the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over the lease term in a similar economic environment.

Maturities of lease liabilities:

(in thousands) March 31, 2026

Remainder of 2026 $ 13,947

Thereafter 5,777

Total lease payments 82,234

imputed interest (1)

(1) Lease liabilities are measured at the present value of the remaining lease payments using a discount rate determined at lease commencement unless the discount rate is updated due to a lease reassessment event.

Cash flow information

Three Months Ended

(in thousands) 2026 2025

Cash paid for operating leases, net of tenant improvement allowances $ 4,180 $ 4,581

Right of use assets obtained in exchange for operating lease obligations $ 661 $ —

Credit facility

5 unchanged sentences

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.

As of March 31, 2026, the Company is compliant with all Credit Facility covenants.

As of March 31, 2026 and December 31, 2025, the Company had letters of credit of $ 26.7 million under the Credit Facility, however we had no cash borrowings.

As of June 30, 2026, the Company is compliant with all Credit Facility covenants.

As of June 30, 2026 and December 31, 2025, the Company had letters of credit of $ 1.7 million and $ 26.7 million, respectively, under the Credit Facility, however we had no cash borrowings.

PEGASYSTEMS INC.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands) 2026 2025 2026 2025

7 unchanged sentences

Accrued employee severance and related costs:

Three Months Ended

Six Months Ended

(in thousands) 2026 2025

3 unchanged sentences

Currency translation adjustments ( 15 ) 117

March 31, (1)

$ 3,976 $ 706

13 unchanged sentences

Assets and liabilities measured at fair value on a recurring basis:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

(in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

3 unchanged sentences

Changes in venture investments:

Three Months Ended

Six Months Ended

(in thousands) 2026 2025

1 unchanged sentence

New investments — 11,529

Sales of investments — ( 33,223 )

Changes in foreign exchange rates ( 34 ) 166

Changes in fair value:

included in other (loss) income, net

included in other income (loss), net

( 2,059 ) 19,480

1 unchanged sentence

( 265 ) ( 535 )

March 31, $ 19,662 $ 21,715

June 30, $ 19,663 $ 18,651

The carrying value of certain financial instruments, including receivables and accounts payable, approximates fair value due to their short maturities.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(Dollars in thousands)

2026 2025 2026 2025

$ 196,292 47 % $ 208,116 54 % $ 415,547 49 % $ 477,308 56 %

Other Americas 27,148 6 % 19,632 5 % 66,407 8 % 53,373 6 %

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands)

2026 2025 2026 2025

Pega Cloud $ 213,934 $ 166,743 $ 418,965 $ 317,866

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands) 2026 2025 2026 2025

8 unchanged sentences

Expected future revenue from existing non-cancellable contracts:

As of March 31, 2026:

As of June 30, 2026:

(Dollars in thousands) Subscription services Subscription license Consulting Total

7 unchanged sentences

$ 1,562,033 $ 351,046 $ 52,624 $ 52,928 $ 2,018,631 100 %

As of March 31, 2025:

As of June 30, 2025:

(Dollars in thousands) Subscription services Subscription license Consulting Total

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands) 2026 2025 2026 2025

4 unchanged sentences

Research and development

7,943 7,490 17,962 15,875

General and administrative

6,976 7,574 16,442 17,010

$ 36,226 $ 36,730 $ 82,041 $ 78,155

Income tax benefit

$ ( 7,091 ) $ ( 566 ) $ ( 16,255 ) $ ( 1,153 )

As of March 31, 2026, the Company had $ 206 million of unrecognized stock-based compensation expense, net of estimated forfeitures, which is expected to be recognized over a weighted-average period of 1.9 years.

Three Months Ended

March 31, 2026

As of June 30, 2026, the Company had $ 166.8 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.

Six Months Ended

June 30, 2026

(in thousands) Quantity

10 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.

Performance stock options granted in the three months ended March 31, 2026 vest on the second anniversary of the grant date, up to 200 %, subject to the achievement of specified performance metrics over fiscal years 2026 and 2027.

Performance stock options granted in the six months ended June 30, 2026 vest on the second anniversary of the grant date, up to 200 %, subject to the achievement of specified performance metrics over fiscal years 2026 and 2027.

The options expire ten years from the grant date.

Stock repurchase program

On February 10, 2026, the Company’s Board of Directors extended the expiration date of the share repurchase program from June 30, 2026 to June 30, 2027 and increased the authorized repurchase amount by $ 1 billion, of which $ 1.1 billion remains available as of March 31, 2026.

During the three months ended March 31, 2026, the Company repurchased 3.5 million shares of its common stock for $ 167.3 million at an average price per share of $ 47.47 .

During the six months ended June 30, 2026, the Company repurchased 8.9 million shares of its common stock for $ 367.2 million at an average price per share of $ 41.46 .

The share repurchase and authorization amounts disclosed within this Form 10-Q exclude the U.S.

2 unchanged sentences

Effective income tax rate

Three Months Ended

Six Months Ended

(Dollars in thousands) 2026 2025

Provision for income taxes $ 6,941 $ 40,888

Provision for (benefit from) income taxes $ 12,120 $ 36,058

Effective income tax rate 21 % 24 %

The Company’s effective income tax rate decreased in the three months ended March 31, 2026 as compared to the prior period, primarily due to excess tax benefits from stock-based compensation recognized in the current period and the absence of a valuation allowance on substantially all of the Company’s U.S.

The Company’s effective income tax rate decreased in the six months ended June 30, 2026 as compared to the prior period, primarily due to excess tax benefits from stock-based compensation recognized in the current period and the absence of a valuation allowance on substantially all of the Company’s U.S.

deferred tax assets.

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share amounts) 2026 2025 2026 2025

13 unchanged sentences

Outstanding anti-dilutive stock options and RSUs (4)

200 502 284 373

(1) All securities are excluded when their inclusion would be anti-dilutive.

9 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Leases" for additional information.

Legal proceedings

2 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.

As of March 31, 2026 and December 31, 2025, the Company recorded an estimated $ 9.75 million accrued loss related to the agreed in principle settlement of the In re Pegasystems Inc.

As of June 30, 2026 and December 31, 2025, the Company recorded an estimated $ 9.75 million accrued loss related to the agreed in principle settlement of the In re Pegasystems Inc.

Derivative Litigation matter, see additional discussion below.

19 unchanged sentences

On January 29, 2026, the Supreme Court of Virginia remanded Appian’s trade secret case to the Court of Appeals with direction to remand to the Circuit Court of Fairfax County for further proceedings in accordance with its written opinion.

Also on January 29, Judge Oblon scheduled a first status conference for the remanded trial proceedings for May 7, 2026.

On May 7, 2026 Judge Oblon held a first status conference for the remanded trial proceedings and set the retrial to commence on January 11, 2027.

On February 27, 2026, the Court of Appeals of Virginia issued a mandate stating that the judgment is affirmed in part, reversed in part, and remanded to the Circuit Court of Fairfax County for further proceedings consistent with the views expressed in the written opinion of the Court of Appeals of Virginia.

On May 7, 2026, the Court released the Company from its obligation to maintain the $ 25,000,000 letter of credit securing the judgment and the letter of credit was released on June 29, 2026.

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.

57 unchanged sentences

On December 17, 2025, the court entered an order administratively closing this action in light of the developments in the State court cases, described below.

On January 7, 2026, the Collective Plaintiffs agreed in principle to a proposed settlement of the litigation.

On January 7, 2026, the Collective Plaintiffs agreed in principle to a proposed settlement of the litigation, and a final order approving the proposed settlement was entered by the Massachusetts Superior Court on June 30, 2026.

See discussion below within the “State court cases” subsection.

On July 2, 2026, in light of the settlement, the parties to the federal court Consolidated Action filed a stipulation and proposed order of dismissal with prejudice as to all claims.

On July 16, 2026, the Court signed the order dismissing the Consolidated Action with prejudice.

State court cases

11 unchanged sentences

On January 13, 2026, the court entered final judgment in defendants’ favor.

On January 7, 2026, the parties to the federal and state court cases agreed in principle to a proposed settlement of the litigation.

Under the terms of the proposed settlement, the plaintiffs in the federal and state court cases (“Collective Plaintiffs”) agreed to the dismissal of all claims upon the Company adopting certain governance reforms and payment of an estimated aggregate sum of $ 9.75 million, inclusive of a $ 7 million special dividend to shareholders (excluding defendants) and Collective Plaintiffs’ attorney fees.

PEGASYSTEMS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

On January 7, 2026, the parties to the federal and state court cases agreed in principle to a proposed settlement of the litigation.

On January 23, 2026, the parties jointly moved the court for relief from the final judgment in this action for the sole purpose of permitting the parties to seek Court approval of the proposed settlement.

1 unchanged sentence

On March 18, 2026, the Court held a preliminary approval hearing and granted the parties relief from the final judgment.

On April 16, 2026, the Court held a further preliminary approval hearing.

The Court has preliminarily approved the proposed settlement and scheduled a final approval hearing for June 25, 2026.

Although the outcome of the litigation is not certain until final court approval, the Company has recorded an estimated $ 9.75 million accrued loss as of December 31, 2025.

However, it is possible that actual future losses related to the litigation could exceed the accrual amount if and to the extent that the court does not approve the proposed settlement.

On April 16, 2026, the Court preliminarily approved the proposed settlement and it held a final settlement approval hearing on June 25, 2026.

On June 30, 2026, the Court entered an order for final approval of the settlement, including a $ 7 million special dividend to shareholders (excluding defendants) and payment by the Company of $ 2.75 million in Collective Plaintiffs’ attorney fees.

Also on July 2, 2026, the Court entered a final judgment and order of dismissal dismissing the consolidated complaint with prejudice.

Pegasystems v.

21 unchanged sentences

The Company remains confident in the merits of its claims against Appian and the damages claimed, and disputes Appian’s counterclaims, including the amount of and legal basis for the damages sought, believes it has strong defenses to the counterclaims, and intends to vigorously defend against the counterclaims.

Motions for summary judgment are due in June 2026, at which time the Company also expects to file Daubert motions.

Summary judgment briefing was completed on July 16, 2026 and oral argument on summary judgment motions is scheduled for July 24, 2026.

Briefing on Daubert motions pertinent to summary judgment is expected to be completed on July 23, 2026, with any remaining Daubert motions due on September 18, 2026.

A jury trial is currently scheduled for November 2026.

1 unchanged sentence

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-Q

Item 1. Financial Statements