MeritValue

PEGASYSTEMS INC

PEGAdata completeness 88%17 fiscal years on file

Data notes: no data for concept 'totalDebt'

The thesis, from the filings

PEGASYSTEMS INC earns about 27% on invested capital, far above its ~9% cost of capital, but has diluted owners by 127% over 5 years — a real edge showing up in the numbers. The estimate methods put fair value between $3.8 and $36.38 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$1.21B1$1.32B2$1.43B3$1.5B3$1.75B3
Net income−$63M4−$345.6M5$67.8M6$99.2M6$393.4M6
Operating cash flow$39.1M7$22.3M8$217.8M9$345.9M9$505.2M9
Capital expenditure$10.5M10$35.4M11$16.8M12$7.71M12$14.5M12
Free cash flow (derived)$28.7M7−$13M8$201M9$338.2M9$490.7M9
Total debt—————
Cash & equivalents$160M13$145.1M14$229.9M15$337.1M15$212.4M15
Diluted shares81.4M81.9M169.8M179.3M184.8M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$42.61
your share of equity
Profit it earned you last year
$21.29
Free cash flow it threw off
$26.56
Debt you’d be carrying
—

10 shares is a claim on $42.61 of net worth that earned you $21.29 and generated $26.56 of cash last year.

iii. Is this a good business?
Moat signal · return on invested capital
27% avg · 5y
FY21 -38%FY22 —FY23 59%FY24 40%FY25 49%

It earned about 27% on invested capital, year after year, against a ~9% cost of capital — the footprint of real pricing power. Competition usually drags returns like this back down; here it hasn't.

seeing a moat in the numbers →
Management signal · capital allocation
+127% shares · 5y

Share count is up 127% over 5 years — owners have been diluted. Worth asking what they got for it.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0

The 3 estimate methods that apply put fair value between $3.8 and $36.38 a share. They rest on different assumptions, so where they diverge is the story; the Graham Number is a stricter floor, not a target.

DCF · Growth Exit 10Y
$36.38
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth5.0%
  • fcfBase$338.2M
DCF · Growth Exit 5Y
$33.63
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth5.0%
  • fcfBase$338.2M
Earnings Power Value
$3.8
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$67.8M
  • growthAssumed0.0%
Graham Number
$14.29
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years5.0%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $33.63
The three cases
Bear0.0%$27.3
Base5.0%$33.63
Bull10.0%$41.2

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 5.0%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0001013857-24-000012 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-12-31 · accession 0001013857-25-000024 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-12-31 · accession 0001013857-26-000017 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-12-31 · accession 0001013857-24-000012 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0001013857-25-000024 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0001013857-26-000017 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0001013857-24-000012 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0001013857-25-000024 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0001013857-26-000017 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0001013857-24-000012 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-12-31 · accession 0001013857-25-000024 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-12-31 · accession 0001013857-26-000017 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-12-31 · accession 0001013857-23-000020 (CashAndCashEquivalentsAtCarryingValue)
  14. 10-K · period ending 2022-12-31 · accession 0001013857-25-000024 (CashAndCashEquivalentsAtCarryingValue)
  15. 10-K · period ending 2023-12-31 · accession 0001013857-26-000017 (CashAndCashEquivalentsAtCarryingValue)