Pegasystems ( NASDAQ: PEGA ) shares gained 17% on Thursday after the application software company reported stronger-than-expected fourth quarter results and issued an upbeat earnings forecast for 2023.
The company generated adjusted earnings of $0.82 per share on revenue of $396.5M that grew 25% Y/Y. The results topped analysts expectations for $333.78M in revenue and $0.15 per share earnings.
In Q4, annual contract value grew 16% year-over-year in constant currency and 13% as reported, reaching $1.1B. The company attributed the growth to its go-to-market strategy which focuses heavily on cross-selling and upselling to existing clients.
Another highlight was subscription revenue that topped $1B in 2022 and now represents 81% of Pega's total revenue. Focusing just on subscription services, which includes Pega Cloud and maintenance, backlog grew 13% Y/Y, in line with the company's reported ACV growth rate.
Attributing its solid bottom line performance to disciplined expense management, the company stated that it expects to see another significant increase in profitability in 2023.
For 2023, it guides annual contract value growth of 11% - 13%, revenue of $1.4B vs. $1.4B consensus and adjusted EPS of $1.50 vs. $0.74 consensus. Free cash flow is expected to increase to $150M.
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Pegasystems shares climb on strong results, upbeat guidance