Pegasystems Inc.

Good day and welcome to the PegaSystems fourth quarter and full year 2021 earnings results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ken Bilwell, Chief Operating Officer. Please go ahead, sir.

Thank you. Good evening, ladies and gentlemen, and welcome to PegaSystems Q4 2021 earnings call. Before we begin, I would like to read our safe harbor statement. Certain statements contained in this presentation may be construed as forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The words expects, anticipates, intends, plans, believes, will, could, should, estimates, may, targets, strategies, projects, forecasts, guidance, likely, and usually, or variations of such words or other similar expressions, identify forward-looking statements, which speak only as of the date the statement was made and are based on current expectations and assumptions. Because such statements deal with future events, they are subject to various risks and uncertainties. Actual results for fiscal year 2021, 22, and beyond could differ materially from the company's current expectations. materially from those expressed in forward-looking statements are contained in the company's press release announcing its Q4 2021 earnings and the company's filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2021, and other recent filings with the SEC. Investors are cautioned not to place undue reliance on such forward-looking statements, and there are no assurances that the matters contained in such statements will be achieved. Although subsequent events may cause our view to change, except as required by applicable law, we do not undertake and specifically disclaim any obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. And with that, I will turn the call over to Alan Treffler, founder and CEO of Pegasystems.

Thank you, Ken, and thank you to everyone who's joining today's call. I'm pleased that we ended the year with solid results. by staying focused and leveraging our strengths. We grew ACV, annual contract value, our most important metric, to over $1 billion for the first time ever. Our low-code software platform for workflow automation and AI-powered decisioning is, I think, unmatched in the industry. And the largest and most demanding enterprises and governments around the world choose us to address their most mission-critical challenges. Increasingly, we're being selected as the enterprise workflow standard for activity done at scale, from the simple to the most complex. With Pega, our clients don't need to sacrifice scale for speed. We support their digital transformation objectives with solutions that provide immediate value, And with the agility to tackle whatever challenges they may face in the future, we continue to enhance this innovative technology, which consistently receives some of the highest possible ratings from leading analyst firms like Forrester and Gartner, and drives significant and meaningful outcomes for our clients. We have a loyal client base that understands and values the power of what we offer. and is leveraging Pega to deliver inspiring results and continues to provide ample opportunity for expansion. We have a dedicated and deepening partner ecosystem that's helping us accelerate our growth and bring even more value to our clients. Our partners continue to focus on delivery excellence and are an essential element in ensuring successful adoption by our clients. We have a culture built on inclusivity, collaboration, accountability, innovation, and excellence, committed to giving back and making a difference in our communities. I'm really proud that we recently scored 95 out of 100 on the Human Rights Campaign Foundation's 2022 Corporate Equality Index. This is a globally recognized benchmark and represents our team members coming forward and doing the right things. And importantly, we have a team of more than 6,000 people around the world that are dedicated, passionate, and resilient, who make all of this possible and who make me proud every day. Now, in terms of market dynamics and competitive differentiation, let me just say that digital transformation continues to be central to our clients' successes, and is driving our business. Gartner is predicting continued growth in enterprise software spending, driven largely by organizations upgrading their software stack to software as a service and seeking continued flexibility and agility. And IDC is predicting investment in digital transformation software to grow about 25% every year from now through 2024. Though initially accelerated by the pandemic, it's clear to me this industry focus will continue, and we're in a great position to capitalize on this trend for years to come. I'm energized about the terrific market opportunity this represents for us and our ability to significantly help clients solve problems both today and for tomorrow. We are working to be the low-code software platform, the low-code software platform, for workflow automation and AI-powered decisioning. And these powerful capabilities allow us to crush business complexity so our clients can more easily make decisions, save time, and get work done. We differentiate on our architecture, which allows us to tackle mission-critical issues our clients have today and will have in an unpredictable future. Our cloud choice approach which allows clients to use our fully managed Pega Cloud services or to run our software on their cloud of choice, supports the growing trends we're seeing in multi-cloud environments. And our exceptionally powerful and adaptable software is scalable to provide maximum reuse while enabling collaboration between business and IT leaders for rapid innovation. I'm pleased that we're trusted by many of the world's largest and most demanding enterprises and governments, and that they're using us to fundamentally evolve their businesses and to improve how they engage with their clients by personalizing customer engagement to maximize customer value, streamlining customer service to increase customer satisfaction, retention, and agent productivity, and improving the efficiency of onboarding operations and exception workflows to save time and cost while increasing speed and agility. Now, over 2021, we continue to see the positive impact of our deep and profound client relationships and how they're able to drive outstanding results for our clients. We expanded our reach in many clients and key verticals, including communications, financial services, healthcare, insurance, and government. We also continue to make inroads into organizations that represent new growth opportunities in places like manufacturing, consumer services, and technology services. We continue to deepen relationships and see tremendous opportunity for growth within those existing clients. These clients become sustaining relationships that routinely renew year after year and set the standard for successful examples of significant digital transformation. Our clients continue to expand their use of Pega because we drive value today and we see how they can drive value in the future. That's why so many of our clients are willing and we're honored that they are to publicly talk about their work with us and they will this year again when we're once again holding PegaWorld virtually in May. Now, we're holding PegaWorld virtually this year, but we're excited to bring back in-person events in the second half of this year. And we'll be holding a variety of client and partner events around the world, including regional client engagement events and client and partner advisory boards. Now, going back to PegaWorld, one of the best parts of PegaWorld is hearing from our clients. And this year will once again feature incredible stories, like Cigna, who is using Pega to process more than one million critical and complex healthcare transactions each day and address the needs of customers and patients in a highly personalized way. Ford, who has created a center of excellence using Pega as their enterprise low-code workflow automation capability to enable citizen developers to create Pega applications and alleviate IT backlogs. Highmark, who is leveraging Pega to deliver enterprise-wide healthcare consumer engagement and do it at scale across channels focused on improving health outcomes, improving the member experience, and also reducing cost. Or the UK Royal Navy, who is using Pega to transform and modernize its recruitment process with a unified digital platform that provides candidates a better experience and the data that the Navy needs for meaningful insights. Or Verizon, who will showcase how they're using Pega decisions engine to influence and personalize customer relationships and increase sales velocity. Or Wells Fargo, who is using Pega to ensure that each of their five billion monthly interactions with customers is targeted and relevant to the individual, regardless of which channel they choose to connect through. They've just rolled out this new system in 5,000 U.S. branches within a year. And they just published a new video that features this work, so you don't need to wait until PegaWorld to see their incredible story. Just go to Pega.com. I hope you'll check out the PegaWorld website, register, and join us live. I was also delighted to recently hear from our client at Commonwealth Bank of Australia that they've become the subject of a Harvard Business School case study, as their work is being considered a global best practice. The case study is available online at the HBR store and is based largely on the work they're doing with Pagoda Drive, what they call their customer engagement engine. an AI-driven customer experience platform. As the case study says, quote, against the backdrop of a once in a century global pandemic, CEE, their customer engagement engine, helped the group deliver a strong financial performance while also supporting customers with assistance packages designed in response to the coronavirus outbreak. Before I conclude, I also want to provide an executive update. I want to let you know that Hayden Stafford, the president of Global Client Engagement, has decided to pursue an opportunity with a pre-IPO company and will be leaving Pega. In his 22 months with Pega, Hayden helped cultivate an extremely strong go-to-market operation, and we have an experienced and talented team. I am confident the team we have is well positioned to continue to deliver through 2022 and beyond. Collectively, we wish Hayden all the best in his next endeavor. So in summary, I'm excited that as we enter 2022, we are clearly a subscription business. Nearly 100% of our software business is now a subscription business. You can see the significance of this transition in our full-year financial results, which look much more like what you'd expect from a subscription-driven business, and which Ken will take you through shortly. I'm especially excited to see that our revenue growth is now more closely aligned with our ACV growth, which, as I said, we view as the critical measure. And the need for enterprise software to support digital transformation initiatives in our client base continues to grow. And I think we're in a great position to capitalize on that growth and provide solutions unmatched in the industry. We're really excited about the significant opportunity we have this year and beyond. And I believe we have the right team to deliver on these opportunities. To provide more color on the financial results, let me now turn this over to Pega's COO and CFO, Ted Stilwell. Ted?