Pegasystems Inc (PEGA) 2022 Q4 法說會逐字稿

Good day, and welcome to the Pegasystems Fourth Quarter and Fiscal Year-End 2022 Earnings Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kenneth Stillwell. Please go ahead.

美好的一天，歡迎來到 Pegasystems 第四季度和 2022 財年年終收益結果電話會議。今天的會議正在錄製中。在這個時候，我想把會議轉交給肯尼斯史迪威。請繼續。

Thank you. Good evening, ladies and gentlemen, and welcome to Pegasystems Q4 and Full Year 2022 Earnings Call.

謝謝。女士們先生們，晚上好，歡迎來到 Pegasystems 第 4 季度和 2022 年全年收益電話會議。

Before we begin, I'd 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, forecast, 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.

在我們開始之前，我想閱讀一下我們的安全港聲明。本演示文稿中包含的某些陳述可被解釋為 1995 年《私人證券訴訟改革法案》中定義的前瞻性陳述。預期、預期、打算、計劃、相信、將、可能、應該、估計、可能、目標、戰略、項目、預測、指導、可能和通常或此類詞語或其他類似表達的變體標識前瞻性陳述，這些陳述僅在陳述作出之日發表，並基於當前的預期和假設。由於此類陳述涉及未來事件，因此受到各種風險和不確定性的影響。

Actual results for fiscal year 2022 and beyond could differ materially from the company's current expectations. Factors that could cause the company's results to differ materially from those expressed in the forward-looking statements are contained in the company's press release announcing its Q4 2022 and full year earnings and in the company's filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2022, 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 the result of new information, future events or otherwise.

2022 財年及以後的實際結果可能與公司當前的預期存在重大差異。可能導致公司業績與前瞻性陳述中表達的結果存在重大差異的因素包含在公司宣布其 2022 年第四季度和全年收益的新聞稿以及公司向美國證券交易委員會提交的文件中，包括其年度報告截至 2022 年 12 月 31 日止年度的 10-K 表格，以及最近向美國證券交易委員會提交的其他文件。提醒投資者不要過分依賴此類前瞻性陳述，並且無法保證此類陳述中包含的事項將會實現。儘管後續事件可能導致我們的觀點發生變化，但適用法律要求的情況除外，我們不承擔並明確否認任何公開更新或修改這些前瞻性陳述的義務，無論是由於新信息、未來事件或其他原因。

And with that, I will turn the call over to Alan Trefler, Founder and CEO of Pegasystems.

有了這個，我將把電話轉給 Pegasystems 的創始人兼首席執行官 Alan Trefler。

Thank you, Ken, and thank you to everyone on today's call. I'm proud of how our team adapted leveraged our strengths and executed in 2022, demonstrating exceptional resiliency.

謝謝你，肯，也感謝今天電話會議上的每一個人。我為我們的團隊如何適應、利用我們的優勢並在 2022 年執行並展示出非凡的彈性而感到自豪。

We ended the year at 16% ACV growth right, where we said we were, despite multiple significant distractions and challenges. And we're making progress to become a Rule of 40 company, which will drive greater value for our shareholders and opportunities to further invest in our business our technology and our people. Our results reinforce the effectiveness of our strategy to target customers where we know we have tremendous opportunities for growth. Ken will discuss in more detail later in the call.

儘管有許多重大的干擾和挑戰，但我們以 16% 的 ACV 增長率結束了這一年，正如我們所說的那樣。我們正在取得進展，成為一家 40 人規則的公司，這將為我們的股東帶來更大的價值，並有機會進一步投資於我們的業務、技術和我們的員工。我們的結果加強了我們的目標客戶戰略的有效性，我們知道我們有巨大的增長機會。 Ken 將在稍後的電話會議中進行更詳細的討論。

The market dynamics here, I think, are very positive for us in some key ways. Digital transformation continues to be a driving force for our clients and we expect it to be even more important in 2023, given the economic indicators. In the type of uncertain environment we're in and -- well, we're going to continue to being in. Enterprise automation is top of mind for clients who are looking to optimize their investments, increase efficiency and improve effectiveness.

我認為，這裡的市場動態在某些關鍵方面對我們非常有利。數字化轉型仍然是我們客戶的推動力，鑑於經濟指標，我們預計它在 2023 年將變得更加重要。在我們所處的不確定環境類型中——好吧，我們將繼續處於這種環境中。企業自動化是希望優化投資、提高效率和提高有效性的客戶的首要考慮。

According to IDC's 2022 Worldwide CEO survey, the #1 skill CEOs think will be most critical to their success over the next 3 years is digital know-how. At the same time, there was a growing scarcity of developer skills, which helps drive increasing use of low-code and no-code solutions. According to the latest forecast from Gartner, the worldwide market for low-code development technologies is projected to total $27 billion in 2023, an increase of nearly 20% from 2022. And IDC projects that by 2025, of all application developers worldwide will be low-code or no-code developers. This theme is consistent with what we're hearing from clients.

根據 IDC 的 2022 年全球 CEO 調查，CEO 認為在未來 3 年對其成功最關鍵的第一大技能是數字化知識。與此同時，開發人員技能越來越缺乏，這有助於推動越來越多地使用低代碼和無代碼解決方案。根據 Gartner 的最新預測，2023 年全球低代碼開發技術市場規模預計將達到 270 億美元，比 2022 年增長近 20%。而 IDC 預計，到 2025 年，全球所有應用程序開發人員中將有-代碼或無代碼開發人員。這個主題與我們從客戶那裡聽到的一致。

I recently came back from Davos, met face-to-face with CEOs of some of our largest and most strategic customers. They told me they are focused on digital transformation as key to success, and it's going to be especially true in what they expect will be a challenging year. They know they need better and faster ways to do things, driven by the economic environment and scarcity of resources, and Pega is perfectly positioned to leverage these dynamics. We have a long history in this space and a clear strategy to focus us this year and beyond.

我最近從達沃斯回來，與我們一些最大和最具戰略意義的客戶的首席執行官進行了面對面的會面。他們告訴我，他們將數字化轉型作為成功的關鍵，在他們預計充滿挑戰的一年中尤其如此。他們知道，在經濟環境和資源稀缺的推動下，他們需要更好更快的做事方式，而 Pega 完全有能力利用這些動力。我們在這個領域有著悠久的歷史，並且有明確的戰略來關注我們今年及以後的發展。

Our strategy is very much vested in our technology. Pega technology provides the most powerful and scalable low-code platform for AI-powered decisioning and workflow automation is designed to help clients maximize value, simplify service and boost efficiency, free to adapt to change. Our product leadership is proudly recognized by industry analysts and has led to dramatic successes with many of the world's most recognized and sophisticated organizations and their partners.

我們的戰略在很大程度上取決於我們的技術。 Pega 技術為 AI 驅動的決策和工作流自動化提供了最強大和可擴展的低代碼平台，旨在幫助客戶最大化價值、簡化服務和提高效率，自由適應變化。我們的產品領先地位得到了行業分析師的高度認可，並在許多世界上最知名和最先進的組織及其合作夥伴的幫助下取得了巨大的成功。

Pega Cloud innovation has accelerated adoption, and we've made tremendous progress on modernizing our clients who now more than ever are able to make use of our latest advancements. We are strengthening deep strategic relationships with our clients and their trusted partners. And we believe that they are more likely to consolidate their technology choices with proven and trusted providers in this uncertain environment. Finding accelerated value for these clients will translate directly to significant growth for us. And we are building a healthy, agile and efficient organization so that we can work closely with our clients and inspire innovative ideas and creative solutions to their biggest challenges.

Pega Cloud 創新加速了採用，我們在客戶現代化方面取得了巨大進步，他們現在比以往任何時候都更能利用我們的最新進展。我們正在加強與客戶及其信任的合作夥伴的深厚戰略關係。我們相信，在這種不確定的環境中，他們更有可能將他們的技術選擇與經過驗證和值得信賴的供應商結合起來。為這些客戶尋找加速價值將直接轉化為我們的顯著增長。我們正在建設一個健康、敏捷和高效的組織，以便我們能夠與客戶密切合作，激發創新思想和創造性解決方案，以應對他們面臨的最大挑戰。

Now to truly good going into the year, we do expect it will be a tough year based on all the economic indicators, and we've taken steps and planned accordingly. As we announced in early January, that means having had to make some tough decisions to help set us up for both long-term and short-term success. These changes were focused on our go-to-market organization where we're driving alignment to further improve our go-to-market operating model. To drive role clarity and accountability, enable greater efficiency and sharpen our client focus, especially where our historical investment outpaced our growth. Nearly all of the changes have been completed. So there are some markets that we're working through evaluations in adherence to local regs and processes.

現在進入真正的好年頭，根據所有經濟指標，我們確實預計這將是艱難的一年，我們已經採取了相應的措施和計劃。正如我們在 1 月初宣布的那樣，這意味著必須做出一些艱難的決定來幫助我們為長期和短期的成功做好準備。這些變化集中在我們的上市組織上，我們正在推動調整以進一步改進我們的上市運營模式。為了推動角色清晰度和問責制，提高效率並加強我們對客戶的關注，尤其是在我們的歷史投資超過我們的增長的情況下。幾乎所有的改變都已經完成。因此，我們正在通過評估遵守當地法規和流程來開展一些市場工作。

Now I know this is a challenging time for many whose roles are changing or being eliminated as well as those saying goodbye to colleagues, we care deeply for them. And we're working to take great care to support those who lead backup with transitions afford in keeping with our values. Like many other companies, we're planning for more conservative growth in 2023, which Ken will talk about more later in the call.

現在我知道，對於許多角色正在改變或被淘汰的人以及那些與同事道別的人來說，這是一個充滿挑戰的時刻，我們非常關心他們。我們正在努力非常小心地支持那些領導後備工作的人，他們的過渡負擔得起，以符合我們的價值觀。與許多其他公司一樣，我們計劃在 2023 年實現更保守的增長，肯將在稍後的電話會議中詳細討論這一點。

Our overall approach and strength will continue to serve us well as we go beyond this year and into future years where we will continue to adapt. And we're in a position where whether our clients are focused on rapid growth or whether our clients are focused on efficiency and cost cutting, we've got the technology and the approach to do either as we've shown over the years. I'm also excited to see that our subscription transition is coming to completion. And you can see the related impact on our financial results and projections. Combined with the organizational changes we are making, we are well positioned to be a more significant cash generator over time, which gives us the flexibility to invest in growth opportunities for the business.

我們的整體方法和實力將繼續為我們服務，因為我們會超越今年和未來幾年，我們將繼續適應。我們所處的位置是，無論我們的客戶專注於快速增長，還是我們的客戶專注於效率和成本削減，我們都擁有技術和方法來做到這一點，正如我們多年來所展示的那樣。我也很高興看到我們的訂閱過渡即將完成。您可以看到對我們的財務業績和預測的相關影響。結合我們正在進行的組織變革，我們有能力隨著時間的推移成為更重要的現金產生者，這使我們能夠靈活地投資於業務增長機會。

Now Pega, I think, has always had a focus on innovation and provide the most innovative and effective solutions for our clients has, I think, been central to our success. In 2022, we continue to enhance Pega Infinity to give clients the best low-code platform in the industry. Some of the highlights included launching a new version of Pega Infinity, which lets organizations develop apps faster, create smarter workflows and improve experiences for customers and employees.

我認為，現在 Pega 一直專注於創新，並為我們的客戶提供最具創新性和最有效的解決方案，我認為這是我們成功的核心。 2022 年，我們將繼續增強 Pega Infinity，為客戶提供業界最佳的低代碼平台。其中一些亮點包括推出新版本的 Pega Infinity，它可以讓組織更快地開發應用程序、創建更智能的工作流程並改善客戶和員工的體驗。

We continue to focus on Pega Cloud and have significantly increased adoption. We're also finding that our global operation center, which uses extensive workflows built on Pega Infinity can bring automation, availability, reliability and scale to our [out] cloud operation. And we're seeing this as a reason where clients are choosing Pega Cloud over running on their own cloud because they can see how well we could do. We introduced new low-code templates, forces and services to help organizations improve productivity while reducing strain on IT teams, all while still maintaining good governance.

我們繼續專注於 Pega Cloud，並顯著提高了採用率。我們還發現，我們的全球運營中心使用基於 Pega Infinity 構建的廣泛工作流程，可以為我們的 [out] 雲運營帶來自動化、可用性、可靠性和規模。我們認為這是客戶選擇 Pega Cloud 而不是在他們自己的雲上運行的原因，因為他們可以看到我們能做得多好。我們引入了新的低代碼模板、力量和服務，以幫助組織提高生產力，同時減輕 IT 團隊的壓力，同時仍然保持良好的治理。

With the demand for professional developers exceeding count availability, organizations want to be able to tap citizen developers to get work done. But citizen development can also create silos and increase risk and costs if there isn't proper governance or if the tools are not sanctioned or supported by enterprise IT. Many of the lower-end low-code tools in the market today are contributing to that challenge.

由於對專業開發人員的需求超過了可用性，組織希望能夠利用公民開發人員來完成工作。但是，如果沒有適當的治理，或者如果工具沒有得到企業 IT 的認可或支持，公民發展也會產生孤島並增加風險和成本。當今市場上的許多低端低代碼工具都在助長這一挑戰。

Pega's low-code factory approach empowers citizen developers while providing technology support and governance to automate the enforcement of best practice, ensuring security, scalability and maintainability. We've also enhanced our robotics capabilities to make it even easier for users of any skill level to quickly build robotic automations that help make business processes more efficient when robotics makes sense. And we acquired Everflow to add intuitive process mining capabilities to create what we believe is the industry's most complete hyper automation solution, enabling Pega clients to uncover and fix hidden processing efficiencies that would otherwise log down in organization's operations.

Pega 的低代碼工廠方法為公民開發人員提供支持，同時提供技術支持和治理以自動執行最佳實踐，確保安全性、可擴展性和可維護性。我們還增強了我們的機器人技術能力，使任何技能水平的用戶都可以更輕鬆地快速構建機器人自動化，從而在機器人技術有意義時幫助提高業務流程的效率。我們收購了 Everflow 以添加直觀的流程挖掘功能，以創建我們認為是業界最完整的超自動化解決方案，使 Pega 客戶能夠發現並修復隱藏的處理效率，否則這些效率會影響組織的運營。

There's also a lot of interesting tactic elements we're tracking. For example, we're looking carefully at the latest generative AI technologies and how they can position themselves inside our offering to make them better. We're looking at model-driven approaches that help dramatically tackle business models. And all of this, I think, plays on historical strength of Pega.

我們還跟踪了許多有趣的戰術元素。例如，我們正在仔細研究最新的生成式 AI 技術，以及它們如何在我們的產品中定位自己以使其變得更好。我們正在研究有助於顯著解決業務模型問題的模型驅動方法。我認為，所有這一切都依賴於 Pega 的歷史實力。

Pega is terrifically positioned to take advantage of these strengths. We see lots of potential to provide more value to our clients and enhance their relationship with customers. I expect we will have some very exciting news to share at PegaWorld in June as a result of this work.

Pega 非常適合利用這些優勢。我們看到了為我們的客戶提供更多價值並加強他們與客戶關係的巨大潛力。由於這項工作，我預計 6 月份我們將在 PegaWorld 上分享一些非常激動人心的消息。

We also announced Pega LaunchPad, a new cloud-based low-code application development platform, designed to empower users to build and monetize new business-to-business SaaS applications. And this has the potential to provide new revenue streams and an interesting new market for us. Our goal is to sign up several early adopters during 2022 in anticipation of launching in 2023, and we're right on track with where we want to be.

我們還發布了 Pega LaunchPad，這是一個新的基於雲的低代碼應用程序開發平台，旨在幫助用戶構建新的企業對企業 SaaS 應用程序並從中獲利。這有可能為我們提供新的收入來源和有趣的新市場。我們的目標是在 2022 年期間與幾個早期採用者簽約，預計在 2023 年推出，我們正朝著我們想要的方向前進。

I'd like to touch on some client highlights because ultimately, that's what this is, from our point of view, all about for us to be successful with the grower business. We need to make sure our clients are successful. Innovation for innovation's sake has never been our strategy. Whether homegrown and required, we've always thought first about how a new feature or technology or product would support our clients' goals and contribute to their success. That's why we continue to see impressive results from our clients and why so many are willing to talk publicly about how they are leveraging our software. For example, a number of our banking clients recently won awards for their use of Pega software, including NatWest the best banking tech provider for their use of Know Your Customer and Pega customer life cycle management solutions. Invoice Banking Group awarded best use of IT in retail banking versus automation and streamlining of processes for customer credit cards, all built on Pega Cloud. And more than 40 clients have signed up to share their success stories at PegaWorld iNspire this year in June, including Roche, Wells Fargo, Virgin Media and the FDA, just to name a few.

我想談談一些客戶的亮點，因為最終，從我們的角度來看，這就是我們在種植者業務上取得成功的全部。我們需要確保我們的客戶取得成功。為創新而創新從來都不是我們的戰略。無論是自主開發還是需要，我們總是首先考慮新功能、技術或產品將如何支持我們客戶的目標並為他們的成功做出貢獻。這就是為什麼我們不斷地從客戶那裡看到令人印象深刻的結果，以及為什麼這麼多人願意公開談論他們如何利用我們的軟件。例如，我們的許多銀行客戶最近因使用 Pega 軟件而獲獎，其中包括 NatWest 因使用“了解你的客戶”和 Pega 客戶生命週期管理解決方案而成為最佳銀行技術提供商。 Invoice Banking Group 榮獲零售銀行業 IT 最佳應用獎，以及客戶信用卡流程的自動化和簡化，所有這些都建立在 Pega Cloud 上。今年 6 月，已有 40 多家客戶報名參加 PegaWorld iNspire 分享他們的成功故事，其中包括 Roche、Wells Fargo、Virgin Media 和 FDA 等。

We're so excited to be going back to Las Vegas for our first in-person PegaWorld in 4 years. In addition to the many clients, we look forward to joining us there. There are already more than 30 major partners signed up and sponsors, including Accenture, EY, Capgemini and others, and they'll be demonstrating their services and solutions along with our latest technology in our Innovation Hub. Please check out the PegaWorld website register and join us live to hear these stories and see the amazing technology first hand.

我們很高興能回到拉斯維加斯參加我們 4 年來第一次面對面的 PegaWorld。除了眾多客戶之外，我們還期待著加入我們的行列。已經有 30 多個主要合作夥伴簽約和讚助，包括埃森哲、安永、凱捷等，他們將在我們的創新中心展示他們的服務和解決方案以及我們的最新技術。請查看 PegaWorld 網站註冊並加入我們的現場直播，聆聽這些故事並親眼目睹這項驚人的技術。

I'd also like to note that that's been really exciting in this new in-person world again to see a steady stream of our clients coming from Amsterdam to from Australia, visit our new executive briefing center in Cambridge for in-depth highly strategic conversations.

我還想指出，在這個新的面對面世界中再次看到我們的客戶源源不斷地從阿姆斯特丹到澳大利亞，這真的很令人興奮，請訪問我們在劍橋的新執行簡報中心進行深入的高度戰略性對話.

So in summary, I think we've began shown our resiliency and ability to execute in challenging times. I'm excited to see our transition to a subscription business coming to completion and the positive effect is having on our results, and we are on pace to be a Rule of 40 company as we exit 2024. We're in the right space, with the right heritage and the right capabilities and the right strategy. And at the right time to leverage a significant opportunity in front of us, and we have the right team to deliver on that opportunity.

因此，總而言之，我認為我們已經開始展示我們在充滿挑戰的時期的彈性和執行能力。我很高興看到我們向訂閱業務的過渡即將完成，這對我們的業績產生了積極影響，我們有望在 2024 年退出時成為 40 家公司的規則。我們在正確的空間，擁有正確的傳統、正確的能力和正確的戰略。在正確的時間利用擺在我們面前的重要機會，我們有合適的團隊來抓住這個機會。

To provide more color on the financial results, let me turn it back to you, Ken.

為了給財務結果提供更多的顏色，讓我把它轉回給你，肯。

Thanks, Alan. Nothing brings more stability to revenue, profitability and cash flow than our recurring business model, especially in times of economic uncertainty. That's the major reason we embarked on our subscription transition 5 years ago. And our execution has been strong, thanks to the hard work and resiliency of our team in close collaboration with our clients and our partners.

謝謝，艾倫。沒有什麼比我們的經常性業務模式更能帶來收入、盈利能力和現金流的穩定性，尤其是在經濟不確定時期。這是我們 5 年前開始訂閱過渡的主要原因。我們的執行力一直很強，這要歸功於我們團隊的辛勤工作和彈性，以及與我們的客戶和合作夥伴的密切合作。

Over this 5-year transition period, we've achieved a nearly 250% increase in our annual contract value and more than doubled our subscription revenue, which in 2022, I'm happy to say top to $1 billion. And now the subscription revenue is represents 81% of Pega's total revenue, up from just around 50% a few years ago, with the majority of the remaining revenue coming from professional services. Our subscription model helps us build a more resilient business and improve profitability and scale through operating leverage, especially with our high client retention rates and massive client expansion opportunities.

在這 5 年的過渡期內，我們的年度合同價值增長了近 250%，訂閱收入增加了一倍多，我很高興地說到 2022 年將達到 10 億美元。現在，訂閱收入佔 Pega 總收入的 81%，高於幾年前的 50% 左右，其餘收入的大部分來自專業服務。我們的訂閱模式幫助我們建立更具彈性的業務，並通過運營槓桿提高盈利能力和規模，尤其是在我們高客戶保留率和大量客戶擴展機會的情況下。

Growth in annual contract value is the key growth metric to measure our business momentum. During the transition, we almost exclusively focused on ACV because of its critical importance. So let's talk about our ACV results. In Q4 2022, annual contract value increased 16% year-over-year in constant currency and 13% as reported, reaching $1.1 billion. Our ACV growth was driven by our go-to-market strategy where we focus heavily on cross-selling and upselling to our existing clients.

年度合同價值的增長是衡量我們業務發展勢頭的關鍵增長指標。在過渡期間，我們幾乎完全專注於 ACV，因為它至關重要。那麼讓我們談談我們的 ACV 結果。 2022 年第四季度，年度合同價值按固定匯率計算同比增長 16%，報告的同比增長 13%，達到 11 億美元。我們的 ACV 增長是由我們的上市戰略推動的，在該戰略中，我們重點關注對現有客戶的交叉銷售和追加銷售。

Pega Cloud ACV reached $455 million, an increase of over $90 million. Our 60% -- over 60% of our new client commitments were from Pega Cloud deals in 2022. Another important metric to measure our success during our subscription transition is growth in remaining performance obligation or backlog. Total backlog reached $1.36 billion as reported. As we highlighted last year in our earnings call in Q4 of 2021, our subscription license backlog was unusually high, resulting in a tough compare this year.

Pega Cloud ACV 達到 4.55 億美元，增長超過 9000 萬美元。我們 60% - 超過 60% 的新客戶承諾來自 2022 年的 Pega Cloud 交易。衡量我們在訂閱過渡期間成功與否的另一個重要指標是剩餘履約義務或積壓的增長。據報導，積壓總額達到 13.6 億美元。正如我們去年在 2021 年第四季度的財報電話會議上強調的那樣，我們的訂閱許可證積壓異常高，導致今年的比較艱難。

Focusing just on subscription services, which includes Pega Cloud and maintenance, backlog grew 13% year-over-year, in line with our reported ACV growth rate. We are currently in the final months of our subscription transition and our 2022 results demonstrate that we exited the year with improved profitability as we expected we would.

僅關注包括 Pega Cloud 和維護在內的訂閱服務，積壓訂單同比增長 13%，與我們報告的 ACV 增長率一致。我們目前正處於訂閱過渡的最後幾個月，我們 2022 年的業績表明，我們在今年結束時盈利能力有所提高，正如我們預期的那樣。

Let me give you a few examples. First, our non-GAAP EPS reached $0.72, an increase of over 200% year-over-year. Our non-GAAP EPS performance was primarily driven by more disciplined expense management, especially in sales and marketing. In fact, total sales and marketing costs were down slightly year-over-year. You'll hear a little later that we expect to see another significant increase in profitability in 2023. Second, Pega Cloud gross margin improved approximately 300 basis points to 70%. The improvement in Pega Cloud gross margin was driven by increased scale as well as innovation in our cloud architecture that helped increase automation and further drive efficiency.

讓我舉幾個例子。首先，我們的非 GAAP 每股收益達到 0.72 美元，同比增長超過 200%。我們的非 GAAP 每股收益業績主要是由更嚴格的費用管理推動的，尤其是在銷售和營銷方面。事實上，總銷售和營銷成本同比略有下降。稍後你會聽到我們預計 2023 年盈利能力將再次顯著增長。其次，Pega Cloud 的毛利率提高了大約 300 個基點，達到 70%。 Pega Cloud 毛利率的提高是由於規模擴大以及我們的雲架構創新有助於提高自動化程度並進一步提高效率。

When the subscription transition is complete, free cash flow generation will start to normalize a critical step on our path to becoming...

當訂閱過渡完成後，自由現金流的產生將開始正常化，這是我們成為……的關鍵一步。

(technical difficulty)

（技術難度）

Ladies and gentlemen, please stand by while we work to reconnect our presenters.

女士們先生們，請在我們努力重新連接我們的演示者時站在一旁。

(technical difficulty)

（技術難度）

Please go ahead, your line is open.

請繼續，您的線路已開通。

Thank you, operator. Apologies, everyone. We lost our phone connection here in our new office in Waltham. So apologies for that. I'm going to pick up where I think I dropped off, which was talking about profitability. We are currently in the final months of our subscription transition, and our 2022 results demonstrate that we exited the year with improved profitability as we expected we would.

謝謝你，運營商。抱歉，大家。我們在沃爾瑟姆的新辦公室失去了電話連接。對此深表歉意。我要從我認為我掉下來的地方開始，這是在談論盈利能力。我們目前正處於訂閱過渡的最後幾個月，我們 2022 年的業績表明，我們在今年結束時盈利能力有所提高，正如我們預期的那樣。

Let me give you a few examples. First, our non-GAAP EPS reached $0.72, an increase of over 200% year-over-year. Our non-GAAP EPS performance was primarily driven by more disciplined expense management, especially in sales and marketing. In fact, total sales and marketing costs were down slightly year-over-year. You'll hear a little later that we expect to see another significant increase in profitability in 2023. Second, Pega Cloud gross margin improved approximately 300 basis points to 70%. The improvement in Pega Cloud gross margin was driven by increased as well as innovation in our cloud architecture that increased automation, which further drove efficiency. When the subscription transition is complete in 2023, the free cash -- free cash flow generation will start to normalize a critical step on our path to become a Rule of 40 company as we exit 2024. As a reminder, we define Rule of 40 as the combination of ACV growth and free cash flow margin which adjusts for other items outside the ordinary course of business. The reason I say we will become a Rule of 40 company as we exit 2024 is because our bookings are skewed toward the end of the year. So our cash collections tend to bridge to the following year. Once we exit 2024, our cash collections should be more normalized. That said, you should expect to see significant improvements in free cash flow in 2023 and in '24.

讓我舉幾個例子。首先，我們的非 GAAP 每股收益達到 0.72 美元，同比增長超過 200%。我們的非 GAAP 每股收益業績主要是由更嚴格的費用管理推動的，尤其是在銷售和營銷方面。事實上，總銷售和營銷成本同比略有下降。稍後你會聽到我們預計 2023 年盈利能力將再次顯著增長。其次，Pega Cloud 的毛利率提高了大約 300 個基點，達到 70%。 Pega Cloud 毛利率的提高是由我們的雲架構的增加和創新推動的，這些架構提高了自動化程度，從而進一步提高了效率。當訂閱過渡在 2023 年完成時，自由現金——自由現金流的產生將開始正常化，這是我們在 2024 年退出 Rule of 40 公司的道路上邁出的關鍵一步。提醒一下，我們將 Rule of 40 定義為ACV 增長和自由現金流利潤率的組合，它針對正常業務過程之外的其他項目進行了調整。我說我們將在 2024 年退出時成為 40 人公司規則的原因是因為我們的預訂偏向年底。因此，我們的現金收款往往會過渡到下一年。一旦我們退出 2024 年，我們的現金收集應該更加規範化。也就是說，您應該期望在 2023 年和 24 年看到自由現金流的顯著改善。

Moving to our fiscal year 2023 guidance. To start, I want to remind you of our guidance philosophy and approach. It's our practice to provide annual guidance at the beginning of the year, we do not typically update guidance. For the last several years, we invested aggressively in sales and marketing to accelerate our ACV growth rate. And our guidance philosophy reflected our belief that our incremental investment in sales and marketing would result in significant ACV growth acceleration. As we thought about our 2023 guidance approach, we looked at the world events that we believe 2023 will be a tougher and less predictable year for everyone. And our 2023 guidance is informed by this view. We know from experience that during uncertain times, focus is more important than ever, and we believe the changes we made to our go-to-market strategy will work extremely well in the current environment.

轉到我們的 2023 財年指南。首先，我想提醒您我們的指導理念和方法。我們的慣例是在年初提供年度指南，我們通常不會更新指南。在過去的幾年裡，我們積極投資於銷售和營銷，以加快我們的 ACV 增長率。我們的指導理念反映了我們的信念，即我們對銷售和營銷的增量投資將導致 ACV 增長顯著加速。在考慮我們的 2023 年指導方針時，我們審視了我們認為 2023 年對每個人來說都將是更艱難、更難以預測的一年的世界大事。我們的 2023 年指南就是基於這種觀點。我們從經驗中知道，在不確定的時期，專注比以往任何時候都更加重要，我們相信我們對進入市場戰略所做的改變將在當前環境下非常有效。

In January, we announced a 4% reduction in our global workforce. We expect that action to result in over $75 million of net savings versus our original spending plan and we're focused on improving our sales efficiency by further selling into our existing client base, which is made up of the largest and most respected global brands. We are pursuing new clients selectively. We often land new clients because a buyer from an existing client takes a role with a new prospect or because a partner recommends Pega as part of a major digital transformation project or because an industry analyst firm recommends Pega. Obviously, there's a reasonably high amount of uncertainty in this market. And we assume that there's risk that enterprise software companies, including Pega, could experience longer deal sales cycles, lower close rates and deal value compression. Given these risks, we've decided to factor this into our guidance.

一月份，我們宣佈在全球範圍內裁員 4%。與我們最初的支出計劃相比，我們預計這一行動將帶來超過 7500 萬美元的淨節省，並且我們專注於通過進一步向我們現有的客戶群銷售來提高銷售效率，這些客戶群由最大和最受尊敬的全球品牌組成。我們正在有選擇地尋求新客戶。我們經常獲得新客戶，因為現有客戶的買家承擔了新的潛在客戶角色，或者因為合作夥伴推薦 Pega 作為主要數字化轉型項目的一部分，或者因為行業分析公司推薦 Pega。顯然，這個市場存在相當大的不確定性。我們假設，包括 Pega 在內的企業軟件公司可能會面臨更長的交易銷售週期、更低的成交率和交易價值壓縮的風險。鑑於這些風險，我們決定將其納入我們的指導方針。

So let's get into guidance numbers for full year 2023. Total ACV will grow 11% to 13% year-over-year. We're driving our execution to achieve the Rule of 40 [SBX] at 2024. We think of any such slowing of our ACV growth rate is reflective of the overall economic environment in 2023 and not indicative of the scale of the opportunity or our ability to accelerate growth efficiently in future years. But we will be hyper focused on efficiently accelerating our growth with our Rule of 40 focus. We believe total revenue will be approximately [$1.4] billion. We expect non-GAAP earnings per share of about $1.50 per share.

因此，讓我們進入 2023 年全年的指導數字。總 ACV 將同比增長 11% 至 13%。我們正在推動執行以在 2024 年實現 40 [SBX] 規則。我們認為 ACV 增長率的任何此類放緩都反映了 2023 年的整體經濟環境，並不表示機會的規模或我們的能力以在未來幾年有效地加速增長。但我們將高度專注於通過我們的 40 法則重點有效加速我們的增長。我們認為總收入將約為 [14 億美元] 億美元。我們預計非 GAAP 每股收益約為 1.50 美元。

Given our focus on increasing cash flow, we've added a new guidance metric this year, free cash flow. We project free cash flow of $150 million in 2023. From where we stand today, these are our best estimates of what we will deliver to our shareholders in 2023. A reconciliation of our GAAP and non-GAAP guidance is contained in our earnings release. We also thought it would be helpful to provide additional guidelines as to how people should think about modeling our business in 2023. So I'll share a few of those thoughts. First, we believe Pega Cloud will represent between 60% and 70% of new client commitments in 2023, a 1% shift in the projected Pega Cloud mix would impact recognized revenue for the full year by approximately $3 million. Second, 2023 is a more typical year in terms of renewal volume. And as it was in 2022, our renewal portfolio in 2023 is skewed to Q4 of 2023. This dynamic will likely result in a more significant portion of our ACV growth and revenue to occur in the second half of the year, and a larger amount of our collections to straddle Q4 of 2023 into the beginning of 2024.

鑑於我們專注於增加現金流，我們今年增加了一個新的指導指標，即自由現金流。我們預計 2023 年的自由現金流為 1.5 億美元。從目前的情況來看，這些是我們對 2023 年將向股東提供的服務的最佳估計。我們的 GAAP 和非 GAAP 指引的對賬包含在我們的收益發布中。我們還認為，就人們應該如何考慮在 2023 年為我們的業務建模提供額外的指導方針會很有幫助。所以我將分享其中的一些想法。首先，我們認為 Pega Cloud 將佔 2023 年新客戶承諾的 60% 至 70%，預計 Pega Cloud 組合發生 1% 的變化將影響全年確認收入約 300 萬美元。其次，2023 年是續訂量較為典型的一年。與 2022 年一樣，我們在 2023 年的續約投資組合偏向於 2023 年第四季度。這種動態可能會導致我們的 ACV 增長和收入的更大部分發生在下半年，以及更大量的我們的系列跨越 2023 年第四季度到 2024 年初。

Next, in Q4 of 2021, term license backlog was unusually high at $172 million, and you saw that backlog significantly impact revenue in the first quarter of 2022. Given we did not have that dynamic happen at the end of 2022, we expect term license revenue for Q1 of 2023 to be more consistent with the pattern of historical first quarters of a year.

接下來，在 2021 年第四季度，期限許可積壓異常高，達到 1.72 億美元，您會看到積壓顯著影響了 2022 年第一季度的收入。鑑於我們在 2022 年底沒有發生這種情況，我們預計期限許可2023 年第一季度的收入與歷史第一季度的模式更加一致。

In other words, the seasonality of term license revenue in 2022 was unusual, and we expect it to return to a more typical seasonality for 2023. We see Q1, Q2 and Q3 having a similar level of activity, but Q4, as usual, is expected to be significantly greater. When you are focused on selling to your existing clients, naturally, clients are likely to make incremental decisions commensurate with a contract renewal event. Fourth, we expect our sales and marketing expenses to be higher in the first half of 2023 because of PegaWorld, our annual customer conference being held in person in 2023. Last, irrespective of the seasonality of our business, we think the first half of 2023 would be -- likely be the slower part of the year due to the expected economic softness and having fewer renewals.

換句話說，2022 年的長期許可收入的季節性是不尋常的，我們預計它會在 2023 年恢復到更典型的季節性。我們看到第一季度、第二季度和第三季度的活動水平相似，但與往常一樣，第四季度是預計會大得多。當您專注於向現有客戶銷售產品時，客戶自然會做出與合同續簽事件相稱的增量決策。第四，我們預計我們的銷售和營銷費用在 2023 年上半年會更高，因為 PegaWorld 是我們在 2023 年親自舉行的年度客戶會議。最後，不管我們業務的季節性如何，我們認為 2023 年上半年由於預期的經濟疲軟和續約較少，可能是今年較慢的部分。

Our annual Investor Day which will be held during PegaWorld 2023 is scheduled for Monday, June 12 at the MGM Grand in Las Vegas, Nevada. Please mark your calendars for this event. We'd love to have you join us in person after so many years away from PegaWorld. The agenda will include updates on our go-to-market strategy, our technology and our financials, including our long-term model. We will also host a Q&A section during this event.

我們將在 PegaWorld 2023 期間舉行的年度投資者日定於 6 月 12 日星期一在內華達州拉斯維加斯的米高梅大酒店舉行。請為此活動標記您的日曆。在離開 PegaWorld 這麼多年後，我們很樂意讓您親自加入我們。該議程將包括我們的上市戰略、我們的技術和我們的財務狀況的更新，包括我們的長期模型。在此活動期間，我們還將舉辦問答環節。

In conclusion, we're driving toward becoming a Rule of 40 company, which will result in a significant increase in free cash flow generation as well as provide opportunities to further invest in our best-in-class technology, our clients and our people. I look forward to seeing many of you in early March as there are a number of investor conferences in the coming weeks.

總之，我們正在努力成為一家 40 人規則的公司，這將顯著增加自由現金流的產生，並提供機會進一步投資於我們一流的技術、我們的客戶和我們的員工。我期待在 3 月初見到你們中的許多人，因為未來幾週將舉行許多投資者會議。

Operator, please open the line for questions.

接線員，請打開問題線路。

(Operator Instructions) And we will go first to Kevin Kumar with Goldman Sachs.

（操作員說明）我們將首先與高盛公司聯繫凱文庫馬爾。

It's pretty solid results here, particularly on ACV. I guess how much of that resiliency is just a function of kind of the sales reorg that you did last year? And are you seeing the efficiency improvements that you're hoping for?

這裡的結果非常可靠，尤其是在 ACV 上。我想這種彈性在多大程度上只是您去年進行的銷售重組的一種功能？您是否看到了您希望的效率提升？

So Kevin, I'll take the first part of that. So I think that -- I think it's not a surprise that we would expect to start to see better engagement with our target organizations, our existing clients because more -- there's so much more focus and capacity in the company around those clients, those clients are precious to us, not only because they actually -- we got $1 billion of ACV from them, but also because there's tens of billions of dollars of opportunity within those clients for the future. So I do think that, that was helpful that recalibration to the core of our client base.

凱文，我將負責第一部分。所以我認為 - 我認為我們期望開始看到與我們的目標組織和現有客戶更好地互動並不奇怪，因為更多 - 公司圍繞這些客戶有更多的關注和能力，那些客戶對我們來說很寶貴，不僅因為他們實際上 - 我們從他們那裡獲得了 10 億美元的 ACV，還因為這些客戶未來有數百億美元的機會。所以我確實認為，重新校准我們客戶群的核心是有幫助的。

I don't think I would necessarily play victory on efficiency and go to market at this stage if it's so early. But I would say we do see a connection between efficiency and engagement with those exact works. Alan?

我認為如果這麼早，我不一定會在效率上取勝並在這個階段上市。但我想說我們確實看到了效率和參與這些確切工作之間的聯繫。艾倫？

Yes, we're very much still in the midst of the process of having the changes take growth. The good news is the changes have been architecturally made. So the allocation of resources to the organizations, the reallocation of resources to roles that we think make the most sense in this environment. Those things have been announced as part of the kickoff of the year. We spent a good chunk of last year figuring out exactly what we wanted to do because this was, I think, a pretty material change to the go-to-market. But I'm seeing the evidence both from the increased engagement that some of our staff is having, but also from the response from clients that this is all very, very positive. And I that is going to lead to the results we expect.

是的，我們仍然處於讓變化帶來增長的過程中。好消息是已經在架構上進行了更改。因此，將資源分配給組織，將資源重新分配給我們認為在這種環境中最有意義的角色。這些事情已作為今年開球的一部分宣布。去年我們花了很大一部分時間來弄清楚我們到底想做什麼，因為我認為這是對進入市場的重大改變。但我看到的證據既來自我們一些員工的參與度增加，也來自客戶的回應，這一切都非常非常積極。我這將導致我們期望的結果。

That's great. And then just a question on the license -- term license revenue in the quarter. I think that number was quite a bit higher than kind of where Street was at. Anything in terms of kind of anything to call out in terms of pull-forward deals? Or was that just kind of a return to kind of a natural cadence of kind of 4Q type dynamics?

那太棒了。然後只是關於許可證的問題——本季度的長期許可證收入。我認為這個數字比 Street 所在的位置要高很多。就提前交易而言，有什麼可以呼籲的嗎？或者這只是一種回歸到某種 4Q 類型動態的自然節奏？

Yes. Good question. I think the last question -- the last point you just made is absolutely true. At year-end, there tended to be in Q4 a little bit of a higher Client Cloud versus Pega Cloud mix. So I think that's definitely a factor. We also, as I mentioned, last year, we had a number of our deals go into backlog at the end of the year, which then carried into revenue of Q1 of '22. And this year, the timing of some of those deals just happened to be that the revenue came in Q4 versus Q1 of 2023. So -- but I do think the mix was not unexpected. And I think the timing of it was just some -- depending on whether a deal hits on December 31 or January 1, sometimes the difference between whether it comes into revenue or it goes into backlog.

是的。好問題。我認為最後一個問題——你剛才提出的最後一點是絕對正確的。年底時，第四季度的客戶端雲與 Pega 雲的組合往往略高一些。所以我認為這絕對是一個因素。正如我所提到的，我們去年也有一些交易在年底進入積壓狀態，然後計入 22 年第一季度的收入。而今年，其中一些交易的時間恰好是收入出現在第四季度，而不是 2023 年第一季度。所以——但我確實認為這種組合併不意外。而且我認為它只是一些時間 - 取決於交易是在 12 月 31 日還是 1 月 1 日達成，有時它是進入收入還是進入積壓之間的差異。

And we'll go next to Steve Enders with Citi.

我們將與花旗的史蒂夫恩德斯一起去。

I guess I just want to clarify a little bit on what you are seeing on the outlook, particularly with regards to macro. If I'm interpreting it right, it seems like maybe to date, you haven't really seen much of the impact in terms of deal cycle slowing down and those sorts of things that I think you typically think about it in tough macro, but it seems like it's being embedded in the guide. I guess, is that fair to say? And I guess, how should we kind of think about some of the other underlying assumptions that you're thinking about there?

我想我只是想澄清一下您對前景的看法，尤其是在宏觀方面。如果我對它的解釋是正確的，那麼到目前為止，你還沒有真正看到交易週期放緩以及我認為你通常在艱難的宏觀中考慮的那些事情的影響，但是它似乎被嵌入到指南中。我想，這樣說公平嗎？我想，我們應該如何考慮您正在考慮的其他一些基本假設？

Well, I think that reflected in the selection of 11% to 13% is kind of the guidepost. I -- it's a bit schizophrenic candidly, because clearly, there are impacts I would tell you that the move talking to other CEOs is kind of a little bit downer, but not about us, particularly for the ones that we're most worried about, which is a very large and candidly more sophisticated companies. I think that the market impact and the economic impact is going to be way more pronounced on the SMB type market, which we so -- we did -- as we entered last year, we did a conscious we pivot away from that market. which we had pivoted towards sadly, I think, wasting a lot of money. But we pivoted away from it. And that was a repivot that even began before the Ukraine action. And I think that's going to be what gives us a lot more resiliency than many other firms in this market.

嗯，我認為反映在 11% 到 13% 的選擇中是一種指導。我 - 坦率地說，這有點精神分裂，因為很明顯，我會告訴你，與其他首席執行官交談的舉動有點令人沮喪，但不是關於我們，特別是對於那些我們最擔心的人，這是一個非常大而且更成熟的公司。我認為市場影響和經濟影響將在 SMB 類型市場上更加明顯，我們是這樣的——我們確實如此——當我們去年進入時，我們有意識地轉向遠離該市場。我認為我們很遺憾地轉向了這個方向，浪費了很多錢。但我們轉身離開了它。這是一個甚至在烏克蘭行動之前就開始的複蘇。而且我認為這將使我們比這個市場上的許多其他公司更具彈性。

I would also add just one additional point, which is -- and I'm sure you've heard this from other companies like Pega. When you have time periods where budgets may be compressed, there is a tendency for clients spend to concentrate with known vendors or known value propositions in terms of the investment of that incremental budget. And so that plays into our strategy as well if that occurs.

我還要補充一點，那就是——我相信你已經從 Pega 等其他公司聽說過這一點。當您在預算可能會被壓縮的時間段內時，就增量預算的投資而言，客戶傾向於將支出集中在已知的供應商或已知的價值主張上。因此，如果發生這種情況，這也會影響我們的戰略。

Okay. No, that's helpful context there. And I guess maybe competitively, have you kind of seen any change in any kind of market dynamics out there? I know that one of your competitors has been putting out some more negative news out there. So just trying to understand what impact that's potentially having at this point, some of the recent changes there.

好的。不，那是有用的上下文。而且我想也許有競爭力，你有沒有看到任何類型的市場動態發生任何變化？我知道你的一個競爭對手一直在發布一些負面消息。所以只是想了解目前可能產生的影響，最近的一些變化。

Yes, I'm not going to rise to that base as tempted as I might be. The reality is, I think the competitive dynamics are pretty much as we've seen them. There is a believe I'm seeing in particularly larger companies that they have a lot of risk of creating a new generation of technical debt with low-code and no-code approaches that are kind of these little stand-alone things. And this idea of enterprise app factory and the idea of having an architecture that could empower citizens but continue it in a way that it looks same to the folks in technology, we're going to have to possibly maintain a long time. There's a lot of appetite for that level of I would describe it as selectivity and sophistication. So I think that, that positioning helps us enormously and is really competitively advantageous compared to all the companies who use this language, the fact is we've been talking about doing this as an enterprise capability pretty uniquely for the last couple of years. And so I would say the competitive dynamics are going to be much worse for organizations that are -- I describe as kind of more low end or more femoral as opposed to organizations that are capable of doing really -- you need to be able to -- and want to be able to do easy things, but are also capable of doing more (inaudible).

是的，我不會像我可能受到的誘惑那樣上升到那個基地。現實情況是，我認為競爭動態與我們所看到的差不多。我相信我在特別大的公司中看到，他們有很大的風險來創造新一代的技術債務，這些技術債務是低代碼和無代碼的方法，這些都是獨立的小東西。這種企業應用程序工廠的想法以及擁有一種可以賦予公民權力但又以技術人員看起來相同的方式繼續它的架構的想法，我們可能不得不維持很長時間。對這種水平的需求很大，我將其描述為選擇性和復雜性。所以我認為，與所有使用這種語言的公司相比，這種定位對我們有很大幫助，並且確實具有競爭優勢，事實上，在過去的幾年裡，我們一直在談論將此作為一種非常獨特的企業能力。因此，我想說，對於那些組織來說，競爭動態會變得更糟——我將其描述為更低端或更集中的組織，而不是真正有能力做的組織——你需要能夠—— - 希望能夠做簡單的事情，但也有能力做更多（聽不清）。

And we will move to our next question from Rishi Jaluria with RBC Capital Markets.

我們將轉到 RBC Capital Markets 的 Rishi Jaluria 的下一個問題。

This is Richard Poland on for Rishi Jaluria. I guess, one, just on some of the expansion with existing logos, I think in the past, you've mentioned somewhere in the range of 75% to 80% of growth comes from existing logos. As we look forward to next year, how should we kind of think about that mix? And on top of that, what are some of the upsell drivers that you're kind of encouraged by or that you see kind of driving that growth as we head into next year?

這是 Richard Poland 的 Rishi Jaluria。我想，第一，關於現有徽標的一些擴展，我想在過去，你提到過 75% 到 80% 的增長來自現有徽標。展望明年，我們應該如何考慮這種組合？最重要的是，在我們進入明年時，您受到哪些追加銷售驅動因素的鼓勵，或者您認為哪些驅動因素推動了這種增長？

I'll take the first part of that, and I'll let Alan take the upsell drivers. The first part of that is you're absolutely right that a few years ago, we were getting 75% to 80% of our ACV growth from existing logos. If you go back and look at the last couple of quarters and then project out what we think that number will be in 2023, that number will be well in excess of 90% of our ACV that will come from our existing clients. That doesn't mean that we won't get new logos. It doesn't mean that we won't even decide the new logos or an opportunity that we want to push the accelerator on in the future.

我將負責其中的第一部分，我會讓 Alan 負責加售司機。第一部分是你完全正確，幾年前，我們從現有徽標中獲得了 75% 到 80% 的 ACV 增長。如果你回顧過去幾個季度，然後預測出我們認為 2023 年的數字，那麼這個數字將遠遠超過我們現有客戶的 ACV 的 90%。這並不意味著我們不會獲得新徽標。這並不意味著我們甚至不會決定新徽標或我們希望在未來推動加速器的機會。

But for 2023, the new logos that we got to be very targeted and in many cases, not the average deal size of some of the upsell and expansion over our existing clients. So think about that number being in excess of 90%. And then Alan talked about some of the ways that the opportunities we see there are examples.

但是對於 2023 年，我們必須非常有針對性地使用新徽標，並且在許多情況下，而不是我們現有客戶的一些追加銷售和擴展的平均交易規模。所以想想這個數字超過 90%。然後艾倫談到了我們看到的機會的一些例子。

Yes. So -- and what's interesting about talking about logos is we don't really generally consider it a new logo even when we go into an entirely distinct division of one of the major companies that we do business with. What I'm seeing, which is encouraging for the strategy and I think for what we can do in what might be a tough economic time is the level of engagement with very significant companies picking up despite travel restrictions in some cases. And wanted to comment to Cambridge for having a company coming from Australia for 3 days in the Cambridge office, so we can work to help them redesign how we can spread into other areas of their business is exactly the type of thing that we wanted to have happened and was frankly not really happening as much. But now we're seeing that, and it's -- I just think a conscious result of the increased focus, the increased gap of understanding and really working to be more trusted advisers with these clients, which is an investment in a lot of energy and a much more consultative approach as opposed to a transactional approach. And we're seeing that response from clients that make us believe this is working and will work.

是的。所以 - 談論徽標的有趣之處在於，即使我們進入與我們有業務往來的主要公司之一的完全不同的部門，我們也不會真正將其視為新徽標。我所看到的，這對戰略來說是令人鼓舞的，我認為我們在經濟困難時期可以做的是，儘管在某些情況下存在旅行限制，但與非常重要的公司的接觸水平正在上升。並且想對劍橋有一家來自澳大利亞的公司在劍橋辦公室停留 3 天發表評論，這樣我們就可以幫助他們重新設計我們如何擴展到他們業務的其他領域，這正是我們想要的類型發生了，坦率地說並沒有真正發生那麼多。但現在我們看到了這一點，而且它是——我只是認為這是一個有意識的結果，即增加關注、增加理解差距以及真正努力成為這些客戶更值得信賴的顧問，這是對大量精力和精力的投資與交易方法相反，這是一種更具協商性的方法。我們看到客戶的反應讓我們相信這是行之有效的。

Got it. That's very helpful. And then just as a follow-up. With some of the ISV and global system integrator partnerships that you've had, it seems to be picking up a bit in recent quarters. I know Pega LaunchPad has been a good driver there. But just kind of as we think about the relationships there and then kind of what your strategy is on a go-forward basis with some of the partner ecosystem. Is there any update there?

知道了。這很有幫助。然後作為後續行動。憑藉您擁有的一些 ISV 和全球系統集成商合作夥伴關係，最近幾個季度似乎有所回升。我知道 Pega LaunchPad 在那裡一直是一個很好的驅動程序。但是就像我們考慮那裡的關係一樣，然後在與某些合作夥伴生態系統的基礎上考慮你的戰略是什麼。那裡有更新嗎？

Yes. So what's interesting is that I think that the change of relationship with our partners regarding the new strategy has actually played to the way a lot of them are working, which is a lot of them are concentrating on what they call their -- sometimes they call them new diamond customers. Their customers, with whom they have the most significant relationships. And what we have stressed it is the responsibility of our on-the-ground account teams. To meet and to know and to be really face-to-face with the key partner at a major organization, I think the top telco or top bank, they need to build those direct relationships as opposed to thinking of that as something that comes through some sort of third party there. That, I think, is very, very positive, and I'm seeing real enthusiasm from partners as well as from our staff from having taken that responsibility on directly. I hope that makes sense to you in terms of saying it's the person on the ground at Citibank that's going to be responsible for making sure that the partners who work there have direct relationships and can build a sense of trust. Relative to ISVs and LaunchPad. I just want to be clear that we're not expecting LaunchPad to be a significant revenue producer in 2023, but we are really excited about what the potential is there and the uptake. And we are getting interest from a lot of companies, a lot more companies than frankly, we're in a position to be able to service, but we didn't tee up any LaunchPad revenue in any material way for any of the numbers that we've got here. That, I think, is really something we hope to be able to talk a lot about it in '24.

是的。所以有趣的是，我認為與我們的合作夥伴在新戰略方面的關係變化實際上影響了他們中許多人的工作方式，他們中的很多人都專注於他們所謂的 - 有時他們稱之為他們是新的鑽石客戶。他們的客戶，與他們有著最重要的關係。我們強調的是我們實地客戶團隊的責任。要與主要組織的主要合作夥伴會面、了解並真正面對面，我認為頂級電信公司或頂級銀行，他們需要建立這些直接關係，而不是將其視為通過那裡有某種第三方。我認為，這是非常非常積極的，而且我看到合作夥伴和我們的員工都非常熱情地直接承擔了這一責任。我希望這對你來說是有意義的，因為花旗銀行的實地人員將負責確保在那里工作的合作夥伴有直接的關係並可以建立信任感。相對於 ISV 和 LaunchPad。我只是想明確一點，我們並不期望 LaunchPad 在 2023 年成為重要的收入來源，但我們對它的潛力和吸收率感到非常興奮。我們得到了很多公司的興趣，比坦率地說更多的公司，我們能夠提供服務，但我們沒有以任何實質性方式為任何數字提供任何 LaunchPad 收入我們到了。我認為，這確實是我們希望能夠在 24 年談論很多的事情。

And we'll move on to our next question from Pinjalim Bora with JPMorgan.

我們將繼續 Pinjalim Bora 與摩根大通的下一個問題。

Ken, just one question on the ACV growth guidance. Can you help us understand maybe your approach to building that guidance? I'm trying to understand what kind of assumptions you're baking in? Are you kind of taking the pipeline entering and using kind of the close rates you saw in Q3, Q4, flowing that through the year? Are you taking a step down in those close rates? Maybe you're thinking some of the expansion rates ticking down? Just help us understand some of those levers.

肯，只有一個關於 ACV 增長指導的問題。您能否幫助我們了解您構建該指南的方法？我想了解你在烘烤什麼樣的假設？您是否正在使用管道進入和使用您在第三季度、第四季度看到的收盤率，並貫穿全年？您是否正在降低這些收盤價？也許你在想一些擴張率正在下降？只是幫助我們了解其中的一些槓桿。

Sure. So there's a few factors that we typically look at. Naturally, when you look at pipe, we also look at pipe in the organizations that we're focused on in terms of coverage is an existing client. We look at the pipe connected to events like renewals, for example, because natural... (technical difficulty)

當然。因此，我們通常會考慮幾個因素。自然地，當您查看管道時，我們也會查看我們在覆蓋範圍方面關注的組織中的管道是現有客戶。我們查看連接到更新等事件的管道，例如，因為自然......（技術難度）

And ladies and gentlemen, please stand by while we work to reconnect the speakers. Thank you.

女士們先生們，在我們重新連接揚聲器時請稍候。謝謝。

Pinjalim, can you hear me?

Pinjalim，你能聽到我說話嗎？

Yes.

是的。

Sorry, we lost -- we dropped again. So let's try it out...

抱歉，我們輸了——我們又掉了。所以讓我們試試看...

So I want to be clear Ken is not dropping the mic. We're happy to sit here and answer whatever other questions you've got.

所以我想明確一點，Ken 並沒有放下話筒。我們很高興坐在這裡回答您提出的任何其他問題。

I'm not sure why our front line dropped, but there's no power issue anything. So we look at pipe, we look at renewal events because renewal events tend to tie to higher-quality pipe we look at where that pipe is coming from. And quite frankly, some of the -- we don't have -- we have enough clients that we can actually look at the specific pipe and probability adjust the pipe as opposed to using broader level of statistical analysis on close rates, et cetera, across a bigger population. So there's a bunch of factors that play in. And then there's another factor, which is basically a little bit more of the nuance feeling of who are how many AEs, what are the tenured AEs, where the orders were covering, what's the momentum with those ones. So there's a quantitative measure that we use, and then there's also some factors that we use to kind of triangulate on what we think that number would be. But it is not -- we're not using historical close rates or Q4 close rates. It's very specific to the orange and the pipe that we see.

我不確定為什麼我們的前線掉線了，但沒有任何電源問題。所以我們查看管道，我們查看更新事件，因為更新事件往往與更高質量的管道相關，我們查看管道的來源。坦率地說，一些——我們沒有——我們有足夠的客戶，我們可以實際查看特定的管道和概率調整管道，而不是對收盤價等使用更廣泛的統計分析，等等，在更大的人口中。所以有很多因素在起作用。然後還有另一個因素，基本上是更多的細微差別，比如誰有多少 AE，哪些是終身 AE，訂單涵蓋的地方，勢頭如何那些。因此，我們使用了一種定量測量方法，然後我們還使用了一些因素來對我們認為的數字進行三角測量。但事實並非如此——我們沒有使用歷史收盤價或第四季度收盤價。它非常特定於我們看到的橙色和煙斗。

I see. Okay. And can you talk maybe help us about the changes that you made with the risk in the sales are going into this year? And apart from that, obviously, in Q4, I see, as you were pointing out, the S&M was down. What -- how -- where are you seeing that efficiency beyond the risk?

我懂了。好的。你能談談今年你對銷售風險所做的改變嗎？除此之外，顯然，在第四季度，正如你所指出的，我看到 S&M 指數下降了。什麼 - 如何 - 你在哪裡看到超越風險的效率？

Well, so there was some cost calibration that we did in the middle of the year that you may recall in the July time frame. In Q4, you really saw that come into some of our savings. Maybe many people weren't expecting to see it at the level that it came in, in Q4. And then you have the adjustment that we did to the reduction that we talked about, which had its impact that did not impact Q4. That would have impacted Q1 and beyond in terms of savings because none of those actions happen until Q4 was closed out.

好吧，所以我們在年中進行了一些成本校準，您可能會在 7 月的時間範圍內回憶起。在第四季度，您確實看到了我們的一些儲蓄。也許很多人沒想到會在第四季度看到它的水平。然後你有我們對我們談到的減少所做的調整，它的影響沒有影響第四季度。這會影響第一季度及以後的節省，因為在第四季度結束之前，這些行動都不會發生。

To your point on where we're seeing the efficiency. The biggest efficiency driver -- the biggest efficiency driver in sales and marketing that we're focused on is the ratio of non-primary quota carriers to primary quota carriers on our key organizations -- on our target organizations, excuse me. And that ratio had expanded when we did things like what Alan said, like where we actually were going after new logos, we actually had partners trying to drive pipe, et cetera. We really focused on our account executive being the quarter back, so to speak, for the account and the right level of -- in right level support for that organization and then time the yield that we expect to get from that cost buildup that we make around the organization. So really focused -- that is where we're going to drive efficiency because it's going to tie our productivity to the investments that we make around regions or verticals.

關於我們看到效率的地方。最大的效率驅動因素——我們關注的銷售和營銷中最大的效率驅動因素是我們關鍵組織的非主要配額承運人與主要配額承運人的比例——在我們的目標組織上，對不起。當我們像艾倫所說的那樣做事情時，這個比例已經擴大了，比如我們實際上追求新標誌的地方，我們實際上有合作夥伴試圖推動管道，等等。我們真的專注於我們的客戶主管是四分之一，可以這麼說，為客戶和適當的水平——為該組織提供適當的支持，然後計算我們期望從我們所做的成本積累中獲得的收益圍繞組織。如此真正專注——這就是我們要提高效率的地方，因為它將把我們的生產力與我們在區域或垂直領域所做的投資聯繫起來。

If we're in a position where we have account execs and account teams who are focused on a very, very specific target organization, that's a very different and candidly, a tremendously more efficient model when you already know people in that organization to get to know more people and to have the trusted credibility in that organization than the alternative, which we had much more of what I would describe as a lead response approach where we would be looking for people in often new organizations who had the classic qualification activity of (inaudible), they have a budget authority we needed a time line. We're not in that business. We're now in the business of building and deepening credible relationships with in Fortune 2000 companies.

如果我們所處的位置是我們的客戶主管和客戶團隊專注於一個非常非常具體的目標組織，那麼當您已經認識該組織中的人員時，這是一個非常不同且坦率的效率更高的模型認識更多的人，並在該組織中擁有比替代方案更值得信賴的信譽，我們有更多我稱之為領先響應方法的方法，我們將在通常是新組織中尋找具有經典資格活動的人（聽不見），他們有預算授權，我們需要一個時間表。我們不從事那個行業。我們現在正在與財富 2000 強公司建立和深化可靠的關係。

We'll go to our next question from Steve Koenig with SMBC Nikko.

我們將與 SMBC Nikko 一起回答 Steve Koenig 的下一個問題。

Both kind of financial questions here. First one is a little bit in the weeds, but kind of parse out based on your -- the commentary you've offered. Is there a mix shift a little bit to cloud this year because you're forecasting 6% revenue growth with 12% ACV growth?

這裡有兩種財務問題。第一個有點雜草，但根據您提供的評論進行解析。由於您預測 6% 的收入增長和 12% 的 ACV 增長，今年是否有向雲的混合轉變？

No, that -- good question, Steve. That really relates to the amount of backlog that we had at the end of '21 that rolled into 2022 and Q1 of last year that actually kind of makes the optics a little bit year because of the timing of revenue.

不，那個——問得好，史蒂夫。這確實與我們在 21 年底進入 2022 年和去年第一季度的積壓數量有關，由於收入的時間安排，這實際上讓光學有點年頭了。

That makes sense, actually. Okay, that's great. So the other question, maybe a little bit more open-ended. So you haven't updated your fiscal '25 model. You talked about the investor session that's coming up in June. So maybe just a couple of questions around that. Maybe your thought process on waiting to update that model why later. And then in terms of like some of the numbers, I know you're offering guidance, you're not offering that long-term guidance right now. But you look at the kind of the base case 19% ACV growth that you had which looks pretty questionable now. But conversely, you should probably be able to do much better on free cash flow. What -- can you give us any thoughts directionally on that? And then kind of lastly, tied to all this, why not Rule of 30 this year? Is that potentially feasible? And what would need to happen to make that happen?

實際上，這是有道理的。好的，那太好了。所以另一個問題，可能更開放一些。所以你還沒有更新你的 25 財年模型。你談到了 6 月份即將舉行的投資者會議。所以也許只有幾個問題。也許您等待更新該模型的思考過程為何稍後。然後就某些數字而言，我知道您正在提供指導，但您現在沒有提供長期指導。但是你看看你所擁有的 19% ACV 增長的基本案例，現在看起來很值得懷疑。但相反，你應該能夠在自由現金流方面做得更好。什麼 - 你能給我們任何方向性的想法嗎？最後，與這一切相關的是，為什麼今年不實行 30 條規則呢？這可能可行嗎？要做到這一點需要發生什麼？

Yes. So we're not going to preview Investor Day in terms of our long term. We will have some commentary on that. So look forward to talking about that in June. And I think your comment about Rule of 30, Rule of 40. I think that if we were in a normal kind of growth year in 2023, I think that was kind of the track that we were on. I still think we will directionally I think we'll be on our way there. The way the math might work was to see how we land on free cash flow. But keep in mind that free cash flow in 2023, remember, we booked a lot in Q4. We built a lot in Q4, and some of that cash leaks into Q1 of 2024. So if you use that measure only, there is a little bit of a back-end loaded billing and collection. And that kind of -- that puts that -- until we've normalized our free cash flow model, that's one of the reasons why I talked about exits of years.

是的。因此，從長遠來看，我們不會預演投資者日。我們將對此發表一些評論。所以期待在 6 月討論這個問題。我認為你對 30 條規則、40 條規則的評論。我認為，如果我們在 2023 年處於正常的增長年，我認為這就是我們所走的軌道。我仍然認為我們會定向我認為我們會在我們的路上。數學可能起作用的方式是看我們如何獲得自由現金流。但請記住，2023 年的自由現金流，請記住，我們在第四季度預訂了很多。我們在第四季度建立了很多，其中一些現金洩漏到 2024 年第一季度。因此，如果您僅使用該措施，就會有一點後端負載計費和收款。那種——也就是說——直到我們將自由現金流模型正常化，這就是我談論多年退出的原因之一。

And just maybe the last follow-up on that. Do you -- by midyear, do you -- in what ways might you have better visibility into the longer-term model or into fiscal '24, like what -- the first -- are there things in the first half of the year that you'd be looking for to inform that long-term model?

也許這只是最後一次跟進。你 - 到年中，你 - 以什麼方式可以更好地了解長期模型或財政'24，比如 - 第一個 - 今年上半年有什麼事情您正在尋找通知該長期模型的信息嗎？

I think one thing that will definitely be more interesting to see after we get a few months into this year is to see how the economy shakes out in the coming months. We're in February right now, I think we see -- we know a little bit more now than we knew in November, and I think we'll know a little bit more in every month that we get through the year. And that will definitely inform whether 2024 could be a return to some level of normalcy of growth or our normalcy for growth or whether 2024, maybe a continuing challenged year like we think '23 will start. I think we're not -- I think we're seeing signs that this may not be maybe 2023, beginning of the year kind of situation, but we'll have to see how that goes.

我認為，在我們今年進入幾個月後，肯定會看到更有趣的一件事，那就是看看未來幾個月經濟將如何擺脫困境。我們現在在 2 月，我想我們看到了——我們現在知道的比 11 月多一點，而且我認為我們在一年中的每個月都會知道更多一點。這肯定會告訴我們 2024 年是否會恢復到某種程度的增長常態或我們的增長常態，或者 2024 年可能是一個持續充滿挑戰的一年，就像我們認為的 23 年將開始一樣。我認為我們不是——我認為我們看到的跡象表明這可能不是 2023 年年初的情況，但我們必須看看情況如何。

And we'll go next to Joe Meares with Truist.

我們將與 Truist 一起去 Joe Meares 旁邊。

Nice quarter. Just we hear a lot from companies in the space about this theme of vendor consolidation. We've been hearing about it for, I think, a few years now, but it doesn't ever seem to have any specific examples behind it. So I'm curious if -- like the first question -- the first part of the question is, have you seen any like actual evidence of that? And if not, do you think it's still on the come and can provide some upside to the guidance for '23?

不錯的季度。我們從該領域的公司那裡聽到了很多關於供應商整合這一主題的信息。我想，我們已經聽說它好幾年了，但它似乎從來沒有背後有任何具體的例子。所以我很好奇 - 就像第一個問題一樣 - 問題的第一部分是，你有沒有看到任何類似的實際證據？如果沒有，您是否認為它仍然存在並且可以為 23 年的指導提供一些好處？

I think the clearest manifestation of vendor consolidation is the reluctance to introduce new vendors, which I think you actually if you look, you'll see it which is not great for folks who aren't in the places they want to be. And that, I think, candidly, you've seen that historically as well. And I think you'll see that more now.

我認為供應商整合最明顯的表現是不願引入新的供應商，我認為你實際上如果你看的話，你會發現它對於那些不在他們想去的地方的人來說並不是很好。而且，我認為，坦率地說，你在歷史上也看到過這一點。我想你現在會看到更多。

Yes, I think -- so my -- I've heard that -- I've heard the same thing you've heard, Joe, for a number of years, predating my joining Pega, I think the reality is, what I think supply chains are really trying to say is, you add a vendor, you drop a vendor, right? Like you don't actually go out and just keep like proliferating vendors, software vendors and really end up with like 6 systems that do the same thing. I actually think supply chain and budget owners are thinking about that. But I don't know that they can actually -- you can't force an ERP vendor to do a CRM or for CRM to ERP. I mean you are limited with that. But I do think there's a focus on not having this constant creep of the technologies that actually do the same thing as other technologies.

是的，我想——所以我的——我聽說過——喬，在我加入 Pega 之前的很多年裡，我聽到過同樣的事情，我認為現實是，我認為供應鏈真正想說的是，你添加一個供應商，你放棄一個供應商，對嗎？就像你實際上並沒有出去，只是像激增的供應商、軟件供應商一樣，最終真的有 6 個系統做同樣的事情。我實際上認為供應鍊和預算負責人正在考慮這個問題。但我不知道他們實際上可以——你不能強迫 ERP 供應商做 CRM 或 CRM 到 ERP。我的意思是你對此有限制。但我確實認為，重點是不要讓實際上與其他技術做同樣事情的技術不斷蔓延。

Yes. And we are seeing people who are interested in consolidating, for example, different workflow systems to want to Pega's core strength. And so retiring things that weren't able to scale what they wanted or that have targeted that it's technical debt. So that's a positive for us. I suppose I would put that under the vendor consolidation, but it's, I think, a little close to what Ken is saying. It's not like the number of eaters is going to go down by 35%.

是的。我們看到人們有興趣整合，例如，不同的工作流系統想要 Pega 的核心力量。因此，淘汰那些無法擴展他們想要的東西或以技術債務為目標的東西。所以這對我們來說是積極的。我想我會把它放在供應商整合之下，但我認為這有點接近 Ken 所說的。食客的數量不會下降 35%。

Got it. That's great. That's all helpful. Just as a follow-up. I think last quarter, you had mentioned that $1 million purchases were higher than Q2 or Q1. I'm just curious how $1 million purchases trended in the fourth quarter?

知道了。那太棒了。這都是有幫助的。就像後續行動一樣。我想上個季度，你提到 100 萬美元的採購量高於第二季度或第一季度。我很好奇第四季度 100 萬美元的採購趨勢如何？

That was -- it was a fairly typical quarter. In terms of the number of deals that we engage with over $1 million. There was -- it was not a it was not a whale kind of quarter, quite frankly, a whale kind of year. I think the deals were dispersed around a lot more engagement in a broader engagement with our clients. So we didn't get there on any 1 or 2 deals.

那是——這是一個相當典型的季度。就我們參與的超過 100 萬美元的交易數量而言。有 - 這不是一個不是鯨魚的季度，坦率地說，是鯨魚的一年。我認為這些交易分散在與我們客戶更廣泛的接觸中。所以我們沒有達成任何 1 或 2 筆交易。

Makes sense, makes sense.

有道理，有道理。

And with that, I think -- I'm sorry to say that the time is up, I really do apologize for some of the technical difficulties. I am sure you will shake down our Waltham office quite rigorously. And we are always available to talk to you guys informally as I think many of you know. I want to reiterate the importance of coming to PegaWorld June 11 to 13. We're going to have a lot of very cool new stuff to show. And I'd like to thank all of you for joining us on this call and let you know we're all working hard to drive a successful business. Have a great evening. Thanks.

說到這裡，我想——很抱歉，時間到了，我真的為一些技術困難道歉。我相信你會非常嚴厲地整頓我們沃爾瑟姆的辦公室。我想你們很多人都知道，我們隨時可以與你們進行非正式交談。我想重申 6 月 11 日至 13 日參加 PegaWorld 的重要性。我們將展示很多非常酷的新東西。我要感謝你們所有人加入我們的電話會議，讓你們知道我們都在努力推動成功的業務。祝你有個愉快的夜晚。謝謝。

Thanks, everyone.

感謝大家。

And so this concludes today's call. Thank you for your participation. You may now disconnect.

所以今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。