Question · Q3 2025
Raymond Lenzchao sought clarification on the impact of increased Pega Cloud adoption on term license revenue, specifically whether the observed deceleration in the cloud line would continue into Q4. He also asked about the progress and opportunities in application modernization driven by AI.
Answer
Ken Stillwell, COO and CFO of Pegasystems, clarified that with 85% of ACV growth from Pega Cloud, a decline in term license revenue is expected over time, though not at a massive scale. Alan Trefler, Founder and CEO, added that term license revenue fluctuations are often due to accounting anomalies, emphasizing that the shift to Pega Cloud validates its quality and reliability. Regarding application modernization, Mr. Trefler highlighted new Pega GenAI Blueprint features that allow users to upload legacy system assets, including videos, to automatically design and modernize workflows, citing several 100-day implementations in this category.