Pegasystems (NASDAQ:PEGA) COO and CFO Ken Stillwell said the company is positioning its platform around enterprise workflows that require consistent, governed and predictable outcomes, particularly in regulated or control-heavy environments.
Speaking at Oppenheimer’s 29th Annual Technology Conference, Stillwell described Pega’s core market as large organizations that need to configure specialized workflows rather than rely on off-the-shelf applications. He said the company has historically competed with internally developed software, arguing that custom code can create sustainability and change-management challenges over time.
AI, Workflow Governance and Predictability
Stillwell said Pega has incorporated artificial intelligence into application design, development, maintenance and workflow execution. The company’s approach allows customers to use Pega’s AI capabilities, their own agents, or their own gateways within workflows, he said.
He emphasized that generative AI alone is not suited to every enterprise task. Using bank loan origination as an example, Stillwell said the process can involve credit ratings, appraisals, underwriting, disclosure requirements and fair-lending rules. Those workflows must be applied consistently in order for banks to demonstrate compliance with regulations, he said.
According to Stillwell, generative AI produces a unique response each time and therefore cannot by itself provide the deterministic outcomes needed for highly governed processes. He also cautioned that using AI agents to create a company’s own workflow systems could produce expanding and difficult-to-manage code bases.
Stillwell said Pega uses agentic engineering in its own research and development work and has seen the need for careful human oversight. He said agents may attempt shortcuts when instructed to accomplish a task, potentially creating bugs or other unintended code behavior.
AI Costs and Pega’s Pricing Approach
Stillwell also discussed the growing focus on AI computing costs, including token usage. He said organizations should consider both when AI is necessary and which model is most appropriate for a given task, rather than automatically relying on the most expensive frontier models.
Pega’s commitment, he said, is that customers do not pay separately for tokens used within Pega. Instead, the company seeks to manage those costs internally by using AI only where appropriate, selecting suitable models and relying on workflows where they are more effective.
“We are telling you on the back end, we will manage the token cost because we will only use AI when it should be used,” Stillwell said.
He said customers have been interested in that approach because other vendors may charge for AI agents while passing token costs on to customers.
Product Feedback and Sales Execution
Stillwell said customer response to Pega GenAI Blueprint has been positive, particularly because clients can use it to define a business problem, develop a workflow and visualize the eventual application. However, he said some customers wanted to move directly from Blueprint into application development before Pega had released its newer Infinity Studio experience.
He said the release of Pega’s 2026 platform and Infinity Studio helps connect the Blueprint experience with application building. Pega worked with about 25 early-stage customers before the broader availability of the product, receiving user-experience feedback and identifying bugs, according to Stillwell. He said broader customer feedback on the 2026 experience should emerge in coming months.
Addressing the company’s first-half performance, Stillwell said several factors contributed to disappointing annual contract value growth. He cited a lack of sufficient pipeline backup early in the year, a need to engage clients more quickly with Pega’s AI message, and a market that was highly interested but still confused about AI.
Stillwell said Pega is responding by strengthening its pipeline and increasing sales activity, including an emphasis on a “hunter mentality” for new customers and new workflows. The company is using compensation structures with potentially stronger accelerators and lower quotas for teams pursuing new logos, he said, while also requiring outbound activity as a baseline expectation.
Outlook for Customers and Capital Allocation
Stillwell said Pega sees substantial opportunity beyond its existing base of roughly 700 to 750 customers, although building brand awareness, partner-sourced leads and a repeatable new-logo motion will take time. Existing customers may provide faster opportunities because they already have relationships, contracting arrangements and familiarity with Pega’s security requirements, he said.
He said the company’s pipeline, improved engagement activity and more normalized customer conversations give him confidence in the second half. Stillwell said customers have become more knowledgeable about AI and are increasingly distinguishing between applications that could be replaced by AI and those where AI can augment established systems.
On financial discipline, Stillwell said Pega aims to remain a company with free-cash-flow margins above 30% and a “rule of 40-plus” profile. He described profitability and cash generation as measures of operational discipline and sound investment decisions.
Stillwell said the company evaluates share repurchases and acquisitions through a similar return-on-investment lens. While Pega continues to look at acquisition opportunities, he said management does not believe the company has a major portfolio gap and expects it can build most capabilities organically.
About Pegasystems (NASDAQ:PEGA)
Pegasystems Inc is a software company specializing in customer engagement and digital process automation solutions. Headquartered in Cambridge, Massachusetts, Pegasystems develops enterprise applications designed to help organizations streamline operations, manage customer interactions and automate complex workflows. Its platform supports a wide range of use cases, from sales and marketing optimization to case management and robotic process automation.
The core of Pegasystems’ offering is the Pega Platform, a low-code development environment that enables businesses to build and deploy applications with minimal hand-coding.
