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Pegasystems

Q3/FY 2016 Investor Deck

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Safe Harbor Statement Certain statements contained in this presentation including, but not limited to, statements related to future

earnings, bookings, revenue, and mix of license revenue, may be construed as forward-looking statements

as defined by the Private Securities Litigation Reform Act of 1995.

The words expects, anticipates, intends, plans, believes, could, estimates, may, targets, strategies, intends

to, projects, forecasts, and guidance, and other similar expressions identify forward-looking statements,

which speak only as of the date the statement was made. Because such statements deal with future events,

they are subject to various risks and uncertainties. Actual results for fiscal year 2016 and beyond could differ

materially from the Company’s current expectations.

Factors that could cause the Company’s results to differ materially from those expressed in forward-looking

statements are contained in the Company’s press release announcing its 2015 year-end earnings, and in the

Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K

for the year ended December 31, 2015, and other recent filings with the SEC. Although subsequent events

may cause the Company’s view to change, the company undertakes no obligation to revise or update

forward-looking statements whether as a result of new information, future events, or otherwise, since these

statements may no longer be accurate or timely.

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THE MARKET OPPORTUNITY 1

PEGA VALUE PROPOSTION 2

CUSTOMER SUCCESS 4

FINANCIAL DETAILS 5

3 OUR STRATEGY

4

Customer Expectations VS. Business Challenges Unprecedented Volatile Business Environment

Business Challenges Customer

Expectations Seamless

Relevant

Immediate

Coherent

Personal

New Channels

Legacy Systems

Market Change

Economic Pressure

Regulations

Silos

Strategic

Applications

5

Unified Platform Engineered for Evolution

LEADER IN CRM CASE

MANAGEMENT #1

“Pegasystems has the strongest ability in, and received the highest

scores from reference customers for, modeling and predicting customers'

behavior, and for communicating the next action to agents.”

Gartner* *Magic Quadrant for the CRM Customer Engagement Center, 2016

+

REAL-TIME

DECISIONS #1

2015

IBM Appian Pegasystems

2016

2016

Salesforce

Pegasystems

Microsoft

Oracle SAP

+

BPM #1

#1

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CONFORMING APPLICATIONS STRATEGIC APPLICATIONS VS.

• “Out of the box”

• Limited configurations

• Ignore competitive advantages

• Manage complexity

• Connect customers to outcomes

• Anticipate needs

• Evolve as fast as customers do

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Growth Strategy

Low

R

ela

tio

nsh

ip

H

igh

Low Vision & Conceptual Match High

Robust Digital Engagement

supports awareness, consideration, & buying

Content

Outreach

Community

Test-drive

Strong Apps & Engagement Maps

Complement target model,

making key solutions (particularly CRM) easier to

understand,

explain and implement

$30B Strategic

Applications Market

Original BPM

Target

$3B

Execution Initiatives

Extend Leadership with the Pega 7 Platform

Deepen CRM Applications

World Class Digital Marketing

Expand Market Coverage

9

Pega 7 Unified Platform – differentiator

• Model Driven Development

• Customer Decision Hub

• Mobile

• BPM and Case Management

• Data and Integration

• Cloud and On-Premises

• Pega 7 Express

Enterprise-wide transformation. One unified platform

that is 6.4X faster to build, 8X faster to change and

40X faster to mobile.

10

Strategic Applications Driving the end-to-end customer journey

MARKETING SALES &

ONBOARDING

CUSTOMER

SERVICE OPERATIONS

PLATFORM

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From Relationship Selling to Digital Marketing

Pega.com

Digital Content

Awareness Campaigns

Lead Generation Campaigns

Significant Increases in:

• Marketing sourced opportunities

• Contacts

• Organic search

• Site visits

• Engagement

• Video views

• Content downloads

• Social media community

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Broader Coverage

Corporate Markets

Applications Selling

GLOBAL 3,000

ENTERPRISE ACCOUNTS

Relationship Selling

Global 600

Financial Services

Insurance

Healthcare

Comms and Media

Life Sciences

Manufacturing

Energy

Public Sector

Shorter Sales Cycle Cloud Choice Digital Buying

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Expanding the Ecosystem

30% growth YOY

200 + interactive, self-paced online courses 2.8+ million lessons to date

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8 of the Top 10 Credit Card Issuers

8 of the Top 10 Global Banks

6 of the Top 10 Communication Service Providers

10 of the Top 10 Largest Healthcare Payers

7 of the Top 10 Insurance Companies

8 of the Top 10 Life Science Companies

300M Serviced Constituents a Day

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REDUCING CHURN

Using Pega Marketing, Sprint is

seeing more than double the

acceptance of retention offers.

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Pega Marketing provides

real-time, contextual cross and

up-sell offers to increase offer

acceptance by 300%

CONTEXTUAL SELLING

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CUSTOMER RESPONSE

Dramatically improving customer

response time, first touch resolution

and card dispute resolution time by

consolidating 14 applications into

one Pega 7-based application.

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DIGITAL BANKING

Powering ME’s transformation to

Australia’s best digital bank with

Pega 7.

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CONNECTING GLOBAL

EXPERIENCES

12,000 service advisors across

12 countries use Pega Customer

Service providing a 3X increase

in customer satisfaction for

American Express

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MAKING THE BEST

DECISIONS RBS uses Pega Marketing to

engage customers with relevant

offers across all channels

improving response rates by 25%

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GETTING YOU THERE

Pega’s Operations Applications

helps increase Heathrow’s

on-time departures from 68%

to 85%

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PICKING UP THE

PIECES Pega’s Customer Service and

Operations Applications allow

AIG to consolidate 55 claims

systems across 60 countries into

one global system

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SAVING THE DAY

Improving Safelite’s NPS from

73% to 87% and driving greater

operational efficiency across

the organization with Pega Mobile

FINANCIAL DETAILS

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Go To Market Model

• Industry Leading Platform

• Strategic Applications

• Land, Expand, Transform

• Growing Ecosystem

• Digital Enablement 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$126 $162

$212

$264

$337*

$417*

$462

$509*

$590*

$683

$800**

GAAP Revenue

(in millions)

~20% CAGR

*Non-GAAP revenue was $348 in 2010, $421 in 2011, $511 in 2013 and $593 in 2014. The differences are due to the fair value

adjustments for acquired deferred revenue.

** Excluding currency headwinds as initially discussed during Q2’16 earnings call.

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Revenue Growth Consistency GAAP ( in mi l l ions except %)

**

*The difference between GAAP and Non-GAAP is $1M and is due to the fair value adjustment for acquired deferred revenue.

$154 $179

$162 $189

$162

$183

$-

$100

$200

$300

$400

$500

$600

2015 2016

Q1 Q2 Q3

13% Growth

$478

$551*

YTD 15% Growth

17% Growth

16% Growth

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License and Cloud Revenue Growth Consistency GAAP ( in mi l l ions except %)

*The difference between GAAP and Non-GAAP is $1M and is due to the fair value adjustment for acquired deferred revenue.

$64 $76

$71 $82

$67

$80

$-

$50

$100

$150

$200

$250

2015 2016

Q1 Q2 Q3

YTD 18% Growth

19% Growth

$202

$238*

15% Growth

19% Growth

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Recurring Revenue GAAP ( in mi l l ions except %)

Growth YTD Q3’15 vs. YTD Q3’16

Recurring 19%

Perpetual License &

Services 11%

Perpetual License

$103

Perpetual License $106

Services $126 Services $149

Term License $77

Term License $102 Cloud $22

Cloud $31

Maintenance $150

Maintenance $163

YTD Q3'15 YTD Q3'16

Recurring 52%

Recurring 54%

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Geographic Revenue GAAP ( in mi l l ions except %)

U.S.A. $268 56% U.S.A. $308 56% ***

Americas Int’l $46 10%

Americas Int’l $49 9%

EMEA $116 24% *

EMEA $145 26% ** Asia Pacific $48 10%

Asia Pacific $49 9%

YTD Q3'15 YTD Q3'16

35%

65%

34%

66%

*Approx. 13% of total revenue is generated from UK **Approx. 14% of total revenue is generated from UK

***The difference between GAAP and Non-GAAP is

$1M and is due to the fair value adjustment for

acquired deferred revenue.

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Strong Backlog Levels ( in mi l l ions)

$374 $391 $380

$420 $390 $393

$420

$200

$250

$300

$350

$400

$450

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

License backlog is computed by adding billed deferred license and cloud revenue as detailed in Note 10 “Deferred Revenue” and

off-balance sheet license and cloud commitments as detailed in the “Future Cash Receipts from License and Cloud

Arrangements” in the 10-Q.

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Cash, Cash Equivalents and Marketable Securities (in millions)

Q4'15 Q3'16

$219

$130

$49M paid for OpenSpan,

net of cash acquired

$26M of repurchases

under stock buyback

program

$11M of stock

repurchases for tax

withholding payments on

net settled shares

$7M quarterly dividend

payments

$15M in property and

equipment investments

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