Pegasystems Inc

Pegasystems delivered a disappointing second quarter, missing on both the top and bottom lines as AI-driven client hesitation weighed on growth. The Cambridge-based enterprise software company posted non-GAAP diluted EPS of $0.35 for Q2 2026, falling short of the $0.43 consensus estimate by 19.35%, while revenue of $420.72 million trailed the $428.40 million forecast by 1.79%, despite growing 9.4% year over year. The primary culprit was a meaningful slowdown in ACV momentum, with management directly attributing the shortfall to clients delaying purchasing decisions amid rapid shifts in the AI market, a dynamic that dragged total ACV growth to just 7% year over year, reaching $1.62 billion. Pega Cloud remained a relative bright spot, with its ACV climbing 22% to $926.29 million, but that strength was offset by declines in maintenance and subscription license ACV. Looking ahead, management warned these headwinds could persist through year-end, even as the company expressed confidence that its cost-efficient AI deployment approach, designed around predictable tokenomics rather than per-token runtime charges, positions it well as enterprise AI spending matures.