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FinancePegasystems shares fall 13.6% after Q2 revenue and profit miss estimates
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Shares of Pegasystems (NASDAQ: PEGA) dropped 13.6% on July 22, 2026, after the company reported second-quarter earnings that missed analyst expectations on both revenue and adjusted earnings per share. Revenue rose 9% year-over-year to $420.7 million, below the $426.6 million consensus estimate. Adjusted EPS increased from $0.28 to $0.35, but fell short of the $0.43 forecast. The company cited 'unprecedented changes in the AI market' causing clients to delay purchasing decisions, leading to slower annual contract value (ACV) growth of 7% overall, though Pega Cloud ACV grew 22%. This marks the second consecutive quarterly miss for Pegasystems, echoing similar headwinds faced by IBM in the enterprise automation software sector. Despite the stock appearing cheap on adjusted earnings, the sell-off reflects concerns about AI disruption to traditional cloud software demand.
Source report
By Jeremy Bowman, The Motley Fool Published: July 22, 2026 at 7:49 AM PDT Last Updated: July 22, 2026 at 2:49 PM UTC
Shares of Pegasystems (NASDAQ: PEGA) fell sharply on Wednesday after the enterprise automation software company reported second-quarter earnings that missed analyst expectations on both revenue and profit.
As of 9:49 a.m. ET, the stock was down 13.6%.
Pega Comes Up Short
Pegasystems reported quarterly revenue of $420.7 million, up 9% year over year but below the consensus estimate of $426.6 million.
Key metrics from the quarter:
- Annual contract value (ACV) grew 7% overall
- Pega Cloud ACV grew 22%
- Adjusted earnings per share rose from $0.28 to $0.35, missing the expected $0.43
Management attributed the slowdown in ACV growth to "unprecedented changes in the AI market," which caused clients to delay purchasing decisions. The commentary suggests customers are shifting spending toward AI-native tools rather than traditional cloud software.
Pega COO and CFO Ken Stillwell offered an optimistic outlook, stating: "As the market shifts from AI experimentation to tokenomics and reliable business outcomes, that evolution plays directly to Pega's strengths."
What's Next for Pega
Pegasystems does not provide quarterly guidance, which places greater emphasis on its reported results. This marks the second consecutive quarter that the company has missed estimates.
The company's struggles appear to reflect the same headwinds affecting the broader enterprise automation software sector — headwinds that caused IBM stock to plunge the previous week.
While Pega stock appears inexpensive based on adjusted earnings expectations, the sell-off is understandable given the ongoing disruption from AI.
Should You Buy Stock in Pegasystems Right Now?
Before you buy stock in Pegasystems, consider this:
The Motley Fool's Stock Advisor analyst team recently identified what they believe are the 10 best stocks for investors to buy now — and Pegasystems was not among them. The 10 stocks that made the cut are positioned for long-term growth and could deliver significant returns in the coming years.
Stock Advisor has a track record of beating the S&P 500 by 4x, with notable past recommendations including:
- Netflix (recommended December 17, 2004): A $1,000 investment would now be worth $370,332
- Nvidia (recommended April 15, 2005): A $1,000 investment would now be worth $1,272,280
This article was written by Jeremy Bowman and originally published by The Motley Fool.
Source
Yahoo FinanceWestern
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Pegasystems Stock Falls After Q2 Earnings Miss on Revenue and Profit