Pegasystems, Inc.: 2Q26 Recap: Execution and AI Noise Hurt Q2 - 2H Targets Now in Focus

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Pegasystems, Inc.: 2Q26 Recap: Execution and AI Noise Hurt Q2 - 2H Targets Now in Focus

Equity Research

U.S. Software

22 July 2026

Pegasystems, Inc.

2Q26 Recap: Execution and AI

Noise Hurt Q2 - 2H Targets Now in

PEGA OVERWEIGHTFocus

Unchanged

In the short term, PEGA will be a "wait-and-see" story post Q2 U.S. Software POSITIVE

results. The issues in Q2 are explainable (see later) but the Unchanged

bigger question is now if management can deliver the Price Target lowered -19% fromUSDUSD39.0048.00

discussed, much better H2. We feel the market will likely be Price (21-Jul-26) USD 30.94

skeptical until proven otherwise. Potential Upside/Downside +26.1% Source: Bloomberg, Barclays Research

We believe PEGA saw a combination of issues in Q2 that impacted its performance. For a start, Market Cap (USD mn) 5086

there is the AI disruption from companies spending large amounts of their fixed IT budget on AI Shares Outstanding (mn) 164.40

consumption, which creates a crowding-out effect. However, it also seems like there were Free Float (%) 52.27

internal issues that played an important role. PEGA changed its GTM in January to move beyond 52 Wk Avg Daily Volume (mn) 1.9

its historic focus of few high-value add use cases within its customer base towards a more Dividend Yield (%) 0.39

broader approach that also looks at new customers again and new departments within the Return on Equity TTM (%) 51.74

installed base. This new set-up has not been as successful as expected and management talked Current BVPS (USD) 4.18

about corrections that were made in Q2. The second half looks more promising with a very Source: Bloomberg

strong pipeline. However, this means that the company will need to deliver some very large

numbers (compared to the small H1) in the coming quarters.