Pega Cloud and Subscription License ACV Growth
Operating and Free Cash Flow Reconciliation (1)
(in thousands, except percentages)
Guidance
2024
2023
2022
Cash provided by operating activities
$
365,000
Margin (2)
24 %
Margin (2)
$
217,785
15 % $
22,336
Margin (2)
2 %
Investment in property and equipment
(15,000)
(16,781)
(35,379)
Free cash flow
$
350,000
23 %
$
201,004
14 %
$
(13,043)
(1)%
Supplemental information (3)
Restructuring
Legal fees
Interest on convertible senior notes
$
7,000
15,000
5,000
Other
Income taxes
26,000
$
53,000
$
29,401
14,645
4,134
601
11,664
$
60,445
4 %
$
41,789
4,500
6,805
7,645
60,739
4 %
Effect of supplemental information to Rule of 40 achievement (4)
5 %
(1) Our non-GAAP free cash flow is defined as cash provided by operating activities less investment in property and equipment. Investment in property and equipment fluctuates in amount and frequency
and is significantly affected by the timing and size of investments in our facilities. We provide information on free cash flow to enable investors to assess our ability to generate cash without incurring
additional external financings. This information is not a substitute for financial measures prepared under U.S. GAAP. Starting in the third quarter of 2023, the Company calculated free cash flow as cash
provided by operating activities less investments in property and equipment. To ensure comparability, previously disclosed amounts have been updated.
(2) Operating and free cash flow margin are calculated by comparing the respective cash flow to total revenue.
(3) The supplemental information discloses items that affect our cash flows and are considered by management not to be representative of our core business operations and ongoing operational
performance.
Restructuring: Restructuring fluctuates in amount and frequency and is significantly affected by the timing and size of our restructuring activities.
Legal fees: Legal and related fees arising from proceedings outside the ordinary course of business.
Interest on convertible senior notes: In February 2020, we issued convertible senior notes, due March 1, 2025, in a private placement. The Notes accrue interest at an annual rate of 0.75%,
payable semi-annually in arrears on March 1 and September 1.
Other: Fees related to capital advisory services, canceled in-person sales and marketing events, and incremental costs incurred integrating acquisitions.
Income taxes: Direct income taxes paid net of refunds received.
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(4) Rule of 40: A performance metric calculated by adding the annual contract value ("ACV") growth rate and the free cash flow margin. We also provide a table of supplemental information of other items
Pegasystems Inc.
that affect our cash flows and Rule of 40 achievement.View entire presentation