Pegasystems Inc (PEGA) 2023 Q2 法說會逐字稿

Greetings and welcome to the Pegasystems Second Quarter 2023 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Peter Welburn, Vice President of Corporate Development and Investor Relations.

您好，歡迎參加 Pegasystems 2023 年第二季度收益電話會議。 （操作員指示）謹此提醒，本次會議正在錄製中。現在我很高興向您介紹主持人，企業發展和投資者關係副總裁 Peter Welburn。

Thank you, sir. You may begin.

謝謝你，先生。你可以開始了。

Good morning, everyone, and welcome to Pegasystems' Q2 2023 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, forecasts and guidance; or variations of such words and 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.

大家早上好，歡迎參加 Pegasystems 的 2023 年第二季度財報電話會議。在我們開始之前，我想閱讀我們的安全港聲明。本演示文稿中包含的某些陳述可能被解釋為1995 年《私人證券訴訟改革法案》中定義的前瞻性陳述。這些詞語期望、預計、打算、計劃、相信、將、能夠、應該、估計、可能、預測和指導;此類詞語或其他類似表述的變體表示前瞻性陳述，這些陳述僅代表截至該陳述發表之日的情況，並且基於當前的預期和假設。

Because such statements deal with future events, they are subject to various risks and uncertainties. Actual results for fiscal year 2023 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 forward-looking statements are contained in the company's press release announcing its Q2 2023 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 in other recent filings with the SEC.

由於此類陳述涉及未來事件，因此會受到各種風險和不確定性的影響。 2023 財年及以後的實際業績可能與公司當前的預期存在重大差異。可能導致該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該公司宣布2023 年第二季度收益的新聞稿以及該公司向美國證券交易委員會提交的文件中，包括其10-10表格年度報告。 K 表示截至 2022 年 12 月 31 日的年度以及最近向 SEC 提交的其他文件。

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 views 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.

請投資者不要過分依賴此類前瞻性陳述，並且不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、未來事件還是其他原因。

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

接下來，我將把電話轉給 Pegasystems 創始人兼首席執行官 Alan Trefler。

Thank you, Peter, and to everyone who has joined today's call, especially those of you who've gotten up pretty early to do so. I wanted to reinforce that at PegaWorld last month, I had the opportunity to spend time with many of our clients and have very meaningful conversations and then virtually have discussions, not just the ones I have but in meeting with other Pega execs, our clients want to talk about the future of AI, and specifically about the impact of generative AI and how they should be thinking about it, how we are approaching it, and how they can leverage AI responsibly and safely.

謝謝彼得，也感謝所有參加今天電話會議的人，特別是那些起得很早的人。我想強調的是，上個月在PegaWorld 上，我有機會與我們的許多客戶共度時光，進行了非常有意義的對話，然後進行了虛擬討論，不僅僅是我的討論，而是在與其他Pega 高管會面時，我們的客戶希望談論人工智能的未來，特別是生成式人工智能的影響，以及他們應該如何思考它，我們如何對待它，以及他們如何負責任和安全地利用人工智能。

Clients are seeing that this technology will change their business in fundamental ways and are excited about the potential. At the same time, there is so much information in the market and so many conflicting opinions. They are eager to learn more and separate out the marketing hype from the reality. It's clear this technology is going to drive massive shifts in how we get work done, and in Pega's world, how applications are designed, built, evolve and supported.

客戶看到這項技術將從根本上改變他們的業務，並對其潛力感到興奮。與此同時，市場上的信息如此之多，相互矛盾的觀點也如此之多。他們渴望了解更多信息，並將營銷炒作與現實區分開來。很明顯，這項技術將推動我們完成工作的方式以及在 Pega 的世界中應用程序的設計、構建、發展和支持方式發生巨大轉變。

We believe Pega is uniquely positioned to leverage this technology, bring it to our clients in a safe and secure way and take advantage of this massive opportunity. Now for those who attended PegaWorld, you saw this firsthand on the main stage as well as during our investor sessions. We believe that generative AI will accelerate the adoption of Pega, making it easier, faster and cheaper to deploy it; improving the client experience; and driving expansion of existing relationships. And that will translate into helping our clients leverage GenAI in their organizations to improve efficiency, save money and enhance employee and customer satisfaction.

我們相信 Pega 具有獨特的優勢，可以利用這項技術，以安全可靠的方式將其帶給我們的客戶，並利用這一巨大的機會。現在，對於那些參加 PegaWorld 的人來說，您在主舞台以及我們的投資者會議上親眼目睹了這一點。我們相信，生成式人工智能將加速 Pega 的採用，使其部署起來更容易、更快、更便宜；改善客戶體驗；並推動現有關係的擴展。這將轉化為幫助我們的客戶在其組織中利用 GenAI 來提高效率、節省資金並提高員工和客戶滿意度。

Now nonetheless, there are concerns about the overall economic environment. And clients are being conservative in their decision-making even as they engage in these very positive conversations more deeply. Now taking client feedback in and evaluating the impact of this new technology, it's become clear to us that we have further opportunities to streamline how we engage with our clients. During this quarter, we will be working with our teams on ways to get even closer to our customers.

儘管如此，現在人們對整體經濟環境感到擔憂。儘管客戶更深入地參與了這些非常積極的對話，但他們的決策仍然很保守。現在，在吸收客戶反饋並評估這項新技術的影響後，我們清楚地意識到，我們有進一步的機會來簡化與客戶的互動方式。在本季度，我們將與我們的團隊合作，尋找更貼近客戶的方法。

Now because AI is so important, I want to take a minute to be able to reiterate why Pega is uniquely positioned to leverage generative AI and why this will bring special benefits to our clients. Now Pega has been integrating and innovating the use of artificial intelligence and automation since I founded the company, and we've gone through many evolutions. I think this is as an exciting one as I've ever seen.

現在，由於人工智能如此重要，我想花一點時間重申一下為什麼 Pega 在利用生成式人工智能方面具有獨特的優勢，以及為什麼這將為我們的客戶帶來特殊的好處。現在，自從我創立公司以來，Pega 一直在整合和創新人工智能和自動化的使用，我們已經經歷了許多演變。我認為這是我所見過的最令人興奮的事情。

I believe we understand what clients need, and we can drive value and acceleration from Generative AI while preserving the scale and scope that enterprises demand. And a big piece of this that is unique to Pega is we've built an architecture that is perfectly suited to tap into the disruptive power of generative AI, both today and well into the future, and we know how to monetize it.

我相信我們了解客戶的需求，我們可以推動生成式人工智能的價值和加速，同時保持企業所需的規模和範圍。 Pega 的一大獨特之處在於，我們構建了一個非常適合利用生成式人工智能的顛覆性力量的架構，無論是現在還是未來，而且我們知道如何將其貨幣化。

Most companies are thinking about Generative AI as a code generator of one form or another, but that will really only get them so far. Going directly from prompts to code doesn't really provide the structured enterprise needs to create an enterprise-class system they can evolve. In contrast, Pega has always been based on the concept of a business model at the center that creates a structure and a system that can evolve as the industry and customer needs change.

大多數公司都將生成式人工智能視為一種或另一種形式的代碼生成器，但這實際上只能讓他們走到這一步。直接從提示到代碼並不能真正提供結構化的企業需求來創建可以發展的企業級系統。相比之下，Pega 始終基於以商業模式為中心的概念，創建一個可以隨著行業和客戶需求變化而發展的結構和系統。

Our architecture is built on what we call the situational layer cake. And you're going to hear me talk about the layer cake a lot, not just now but in coming quarters, as it helps to really power this revolution. It's a proprietary capability that organizes all of an enterprise's processes, rules, data models and UI into layers, so it supports building and reusing.

我們的架構是建立在我們所說的情景夾心蛋糕之上的。你會聽到我經常談論夾心蛋糕，不僅是現在，而且在未來幾個季度，因為它有助於真正推動這場革命。它是一項專有功能，可將企業的所有流程、規則、數據模型和 UI 組織成分層，因此支持構建和重用。

Now this layer cake is the perfect place to plug-in GenAI. It creates a pace that, after the GenAI contributes, people can see the model, touch it, understand it and regenerate as needed. And it is this layer cake, this architecture, that is what Pega is uniquely able to provide our clients, a proprietary structural advantage at the heart of our products. Now it's not something that can be easily copied or reproduced, and it allows us to develop an integrated Generative AI rapidly and seamlessly.

現在這個夾心蛋糕是插入 GenAI 的完美位置。它創造了一種節奏，在 GenAI 貢獻之後，人們可以看到模型、觸摸它、理解它並根據需要重新生成。正是這種夾層蛋糕、這種架構，正是 Pega 能夠為我們的客戶提供的獨特優勢，這是我們產品核心的專有結構優勢。現在它不是可以輕易複製或複制的東西，它使我們能夠快速、無縫地開發集成的生成式人工智能。

So we have been at the forefront of using AI in responsible ways, and the company's responsible AI frameworks that are trusted by our clients and they will be critical as they build their own AI models. And the layer cake helps us there too by helping create visibility from what comes from Pega versus what a customer might build or develop independently on top of it.

因此，我們一直處於以負責任的方式使用人工智能的最前沿，公司負責任的人工智能框架受到了我們客戶的信任，並且在他們構建自己的人工智能模型時至關重要。千層蛋糕也對我們有幫助，它可以幫助我們了解 Pega 的內容以及客戶可能在此基礎上獨立構建或開發的內容。

Now this combination of architecture, experience and capabilities, I believe, will make us more successful than our competitors because it will help our clients be more successful and being able to let them quickly adapt and build for change.

現在，我相信，這種架構、經驗和能力的結合將使我們比競爭對手更加成功，因為它將幫助我們的客戶更加成功，並能夠讓他們快速適應和構建變革。

By the way, I think GenAI is going to be devastating to the most of the low-code companies that haven't taken this type of approach. As a result, you already see some players starting to talk less about using low code, and I think a lot of low-code players are going to get wiped out. But in Pega, we're still talking about low code because we've always used low code to build the layer cake. We've always used low code in a way that provides the structure that was really almost presciently designed for the introduction of concepts like generative AI. So we can implement generative AI as a strength.

順便說一句，我認為 GenAI 對於大多數沒有採取這種方法的低代碼公司來說將會是毀滅性的。結果，你已經看到一些玩家開始減少談論使用低代碼，我認為很多低代碼玩家將會被淘汰。但在 Pega 中，我們仍然在談論低代碼，因為我們一直使用低代碼來構建層蛋糕。我們一直使用低代碼，以提供幾乎有先見之明的結構，以引入生成式人工智能等概念。因此，我們可以將生成式人工智能作為一種優勢。

Now, I expect that we will monetize Generative AI in 3 ways. First, clients will create more Pega apps and process more work on our platform. Most of our licenses are already work quantity-based. Years ago, we began moving away from seat licenses because, frankly, seats are going to go down. Or if the industry does the right thing, they should go down a lot, and we saw this coming a long, long time ago. So you can think of most of our licenses as being consumption- and capacity-based, which is exactly I believe the type of license you want in this sort of environment. I think it's good for the client and good for us.

現在，我預計我們將通過三種方式將生成式人工智能貨幣化。首先，客戶將創建更多 Pega 應用程序並在我們的平台上處理更多工作。我們的大多數許可證已經是基於工作量的。幾年前，我們開始放棄席位許可證，因為坦率地說，席位將會減少。或者，如果這個行業做了正確的事情，它們應該會下跌很多，我們很久很久以前就看到了這種情況的發生。因此，您可以將我們的大多數許可證視為基於消耗和容量的許可證，我相信這正是您在這種環境中想要的許可證類型。我認為這對客戶和我們都有好處。

Secondly, I do think we're going to see that the fact that we're still in this generative AI work in Pega Cloud and leading with Pega Cloud with Generative AI will serve as catalysts for more clients to move from existing term or maintenance contracts to Pega Cloud subscription agreements.

其次，我確實認為我們將會看到，我們仍在Pega Cloud 中進行生成式AI 工作，並以Pega Cloud 和生成式AI 為主導，這一事實將成為更多客戶放棄現有期限或維護合同的催化劑Pega Cloud 訂閱協議。

And third, we will offer specific GenAI-powered add-on features, for which there will be an additional charge. Now, we recently announced and showed at PegaWorld 20 Generative AI boosters that will be available with Pega Infinity '23 this summer and we've just gotten started. In fact, our engineering team began this year with a GenAI-focused hackathon that resulted in more than 100 new prototypes and capabilities. Many made it in to Infinity '23 and there's much more to come in subsequent releases.

第三，我們將提供由 GenAI 驅動的特定附加功能，但需要額外付費。現在，我們最近宣布並在 PegaWorld 20 生成式 AI 助推器上展示，該助推器將於今年夏天隨 Pega Infinity '23 一起提供，而我們才剛剛開始。事實上，我們的工程團隊今年開始舉辦了一場以 GenAI 為重點的黑客馬拉松，最終產生了 100 多個新原型和功能。許多內容都進入了《Infinity '23》，後續版本中還會有更多內容。

We have clients who are signing up to be early adopters already, and they are engaged and excited about these capabilities and we're excited about working with them and seeing what we can accomplish together.

我們的客戶已經簽約成為早期採用者，他們對這些功能很感興趣並感到興奮，我們很高興與他們合作並看到我們可以共同完成什麼。

Before I move on, I want to take just a few minutes and provide some additional color on PegaWorld because it was so spectacular. This was the first time we came together in person since 2019 and the energy and excitement was palpable. If you couldn't join the sessions or would just like to see all of the replays, they're available on pega.com. Just search on PegaWorld replays.

在繼續之前，我想花幾分鐘時間為 PegaWorld 提供一些額外的色彩，因為它是如此壯觀。這是我們自 2019 年以來第一次面對面聚會，活力和興奮是顯而易見的。如果您無法參加會議或只想觀看所有重播，可以在 pega.com 上觀看。只需搜索 PegaWorld 重播即可。

We had more than 3,500 attendees from around the world, representing over 47 countries. And we had inspiring keynotes from clients like Virgin Media, Rabobank, Citi and Aflac, who are all using Pega to drive their business. We had more than 80 deep-dive breakout sessions with additional clients sharing their stories from companies including BT, Google, Santander, Siemens, T-Mobile, UnitedHealthcare, Verizon and Wells Fargo, but one of my favorite breakouts was from LeasePlan, who talked about their transition to a fully digital business model.

共有來自世界各地超過 47 個國家/地區的 3,500 多名與會者。 Virgin Media、Rabobank、Citi 和 Aflac 等客戶都發表了鼓舞人心的主題演講，他們都在使用 Pega 來推動業務發展。我們舉行了80 多次深入的分組會議，其他客戶分享了他們來自BT、Google、桑坦德銀行、西門子、T-Mobile、UnitedHealthcare、Verizon 和Wells Fargo 等公司的故事，但我最喜歡的分組會議之一來自LeasePlan，他談到了關於他們向全數字商業模式的過渡。

They are leveraging Pega in their center of excellence in pursuit of their vision to becoming a "Car as a Service" organization with a strong focus on service efficiency and digital channels. This will help them optimize costs and capture market growth. And they're leveraging our state-of-the-art Constellation open-user experience technology and our prescriptive design system to give their clients and their staff exceptional experiences. You can find a replay of this excellent session on pega.com. Just go to PegaWorld under events and search on LeasePlan, one word.

他們在其卓越中心利用 Pega，以實現成為“汽車即服務”組織的願景，重點關注服務效率和數字渠道。這將幫助他們優化成本並抓住市場增長。他們利用我們最先進的 Constellation 開放用戶體驗技術和規範設計系統為他們的客戶和員工提供卓越的體驗。您可以在 pega.com 上找到這次精彩會議的重播。只要去 PegaWorld 的 events 並蒐索 LeasePlan，就一個詞。

Now I heard there -- very often how much clients value being able to connect with peers from other companies and learn from the Pega journeys of others. And they told me that, attending in person, they were able to get down in just a few days what might have taken weeks or months in terms of discovery, getting questions answered, experiencing the technology and ultimately understanding the value Pega can provide.

現在我經常聽到——客戶非常重視能夠與其他公司的同行建立聯繫並從其他公司的 Pega 旅程中學習。他們告訴我，親自參加，他們能夠在短短幾天內完成可能需要數週或數月的探索、解答問題、體驗技術並最終了解 Pega 可以提供的價值。

I also heard positive feedback about our client-first (inaudible) model and the value we are, I think, mutually achieving providing a more focused and dedicated engagement team to stay close to our clients. And they're excited about the new capabilities, and they're really looking forward to seeing how we continue to approach Generative AI in the future, finding ways to accelerate development and improve the function of business users without the needs for, well, traditional, longer ways to do it.

我還聽到了關於我們的客戶至上（聽不清）模式的積極反饋，以及我們共同實現的價值，我認為，提供一個更加專注和專注的參與團隊來與我們的客戶保持密切聯繫。他們對新功能感到興奮，並且非常期待看到我們未來如何繼續實現生成式人工智能，找到加速開發和改進業務用戶功能的方法，而無需傳統的方式，更長的方法來做到這一點。

So I came away feeling incredibly energized and more convinced than ever that we have the right client engagement style, the right technology and a team that can drive success for our clients and for Pega. Our partners were there in force, and they also, I think, got both enormous value, and I saw tremendous engagement between them and our clients.

因此，我離開時感到無比精力充沛，並且比以往任何時候都更加確信我們擁有正確的客戶參與方式、正確的技術和一支能夠為我們的客戶和 Pega 帶來成功的團隊。我們的合作夥伴都在現場，我認為他們也獲得了巨大的價值，我看到他們與我們的客戶之間的巨大互動。

So as we move into the second half of the year, we're going to be looking to continue to double down and push on this strategy to improve operating effectiveness with additional improvements to our go-to-market alignment that will help maintain and even greater attention to that focus.

因此，當我們進入今年下半年時，我們將繼續加倍努力並推動這一戰略，以提高運營效率，進一步改進我們的上市一致性，這將有助於維持甚至更加關注這一焦點。

So in summary. We are focused on building a successful company for the long term and to having our clients successfully navigate what is currently, candidly, a challenging selling environment that we think may persist for some time. Let's face it. Right now the world is uncertain and rapidly changing, but I believe we have the right strategy to succeed in this environment while building for the future.

綜上所述。我們致力於建立一家長期成功的公司，並讓我們的客戶成功應對目前我們認為可能會持續一段時間的充滿挑戰的銷售環境。面對現實吧。目前，世界充滿不確定性且瞬息萬變，但我相信我們擁有正確的戰略，可以在這種環境中取得成功，同時建設未來。

We're focusing on our client base with solutions that drive efficiency and cost savings and we are helping our clients navigate the same set of macroeconomic conditions. We see that GenAI will rapidly change the landscape of how work gets done, massively, and we have a unique advantage that we can leverage and that I believe will be sustainable. And we are making good progress as we pursue the goal of trying to be a Rule of 40 company as we exit next year, balancing growth with fiscal discipline and, I'm happy to point out, generating very, very significant cash flow.

我們專注於為客戶群提供提高效率和節省成本的解決方案，並幫助我們的客戶應對同樣的宏觀經濟條件。我們看到 GenAI 將迅速大規模地改變工作方式，我們擁有可以利用的獨特優勢，而且我相信這種優勢將是可持續的。我們正在取得良好進展，我們正在努力實現明年退出時成為 40 條規則公司的目標，在增長與財政紀律之間取得平衡，而且我很高興地指出，我們還產生了非常非常可觀的現金流。

Now to provide more color on financial results, let me turn it over to our CFO and COO, Ken Stillwell.

現在，為了提供更多有關財務業績的信息，讓我將其交給我們的首席財務官兼首席運營官肯·斯蒂爾韋爾 (Ken Stillwell)。

Thanks, Alan. Our first half results demonstrate our ability to generate increasing amounts of free cash flow while maintaining a double-digit growth rate. The most important metric to measure the success of our business continues to be the growth in annual contract value or ACV. At the midpoint of 2023, ACV grew 13% year-over-year. Our ACV growth was driven by the continued momentum of Pega Cloud ACV, which reached $499 million at the end of the second quarter.

謝謝，艾倫。我們上半年的業績表明我們有能力產生越來越多的自由現金流，同時保持兩位數的增長率。衡量我們業務成功與否的最重要指標仍然是年度合同價值（ACV）的增長。到 2023 年中期，ACV 同比增長 13%。我們的 ACV 增長得益於 Pega Cloud ACV 的持續增長勢頭，第二季度末達到 4.99 億美元。

I'm excited that our Pega Cloud SaaS business continues to be the largest and fastest-growing ACV component. And Pega Cloud backlog grew by 23% or $164 million year-over-year. Pega Cloud now represents more than 2/3 of total backlog. This growth is further evidence of the underlying strength and momentum of our subscription transition.

我很高興我們的 Pega Cloud SaaS 業務仍然是最大且增長最快的 ACV 組件。 Pega Cloud 積壓訂單同比增長 23%，即 1.64 億美元。 Pega Cloud 目前佔總積壓工作的 2/3 以上。這種增長進一步證明了我們訂閱轉型的潛在實力和勢頭。

Another key metric to measure the success of our business is cash flow. In the first half of 2023, Pega generated $114 million of cash flow from operations and $123 million of free cash flow, a fantastic achievement. $123 million is the highest level of free cash flow dollars generated in the first half of a year in the history of the company. There are several reasons we delivered this result.

衡量我們業務成功的另一個關鍵指標是現金流。 2023 年上半年，Pega 產生了 1.14 億美元的運營現金流和 1.23 億美元的自由現金流，這是一項了不起的成就。 1.23億美元是該公司歷史上上半年產生的自由現金流的最高水平。我們取得這一結果有幾個原因。

First, in late 2017, we started the subscription transition to move from a company that sold perpetual software licenses to now a company that sells primarily subscription offerings. We embraced the subscription-based business model in response to demand from our clients who are looking for a fully managed offering as a modern way to access our technology. We also like the fact that recurring billings and thus cash collections are more durable and predictable.

首先，在 2017 年底，我們開始進行訂閱轉型，從一家銷售永久軟件許可證的公司轉變為現在主要銷售訂閱產品的公司。我們採用基於訂閱的業務模式，以滿足客戶的需求，他們正在尋求完全託管的產品作為訪問我們技術的現代方式。我們還喜歡這樣一個事實，即經常性賬單和現金收款更加持久和可預測。

We knew and discussed publicly that cash flow would improve as we exited the subscription transition. Seeing Pega generate record free cash flow in the first half of the year is a great step forward in realizing the vision we articulated more than 5 years ago.

我們知道並公開討論過，隨著我們退出認購過渡，現金流將會改善。看到 Pega 在今年上半年創造了創紀錄的自由現金流，這是我們在實現 5 年多前提出的願景方面向前邁出的一大步。

Second, as part of the completion of the subscription model transition, we placed a greater emphasis across the organization on driving free cash flow. Whether it being more disciplined on hiring or more selective with third-party spend, I'm seeing numerous examples of our team members making meaningful steps to focus on improving profitability.

其次，作為完成訂閱模式轉型的一部分，我們在整個組織中更加重視推動自由現金流。無論是在招聘方面更加嚴格，還是在第三方支出方面更加挑剔，我看到了許多我們的團隊成員採取有意義的步驟來專注於提高盈利能力的例子。

Third, we're doing a better job aligning our spending with our ACV growth drivers. In other words, we're instilling better operational rigor than we have in the past. For example, we believe that more than 90% of our ACV growth this year will originate from existing clients through our high client retention rates and our cross-sell and upsell activity. It's far more efficient to sell into existing clients than new logos, especially in times of greater economic uncertainty that I think we'd all agree we're experiencing today.

第三，我們正在更好地調整我們的支出與 ACV 增長驅動力。換句話說，我們正在灌輸比過去更好的操作嚴謹性。例如，我們相信，今年 ACV 增長的 90% 以上將來自現有客戶，通過我們的高客戶保留率以及交叉銷售和追加銷售活動。向現有客戶銷售比新標識要有效得多，尤其是在經濟不確定性更大的時期，我想我們都同意我們今天正在經歷這種情況。

One reminder: In a subscription-based business like ours which generates significant term license revenue, there can be a mismatch between billings and revenue. Under ASC 606, the majority of term license software revenue is recognized upfront. However, billings and cash collections occur primarily 1 year in advance, in equal installments, over the life of the contract. This dynamic means that we can deliver strong cash flow even as reported revenue in any given quarter fluctuates up or down. As a reminder, we do not provide quarterly revenue guidance.

提醒一下：在像我們這樣產生大量定期許可證收入的基於訂閱的業務中，賬單和收入之間可能存在不匹配。根據 ASC 606，大部分定期許可軟件收入是預先確認的。然而，賬單和現金收取主要提前一年發生，在合同有效期內等額分期付款。這種動態意味著即使任何特定季度的報告收入上下波動，我們也可以提供強勁的現金流。提醒一下，我們不提供季度收入指導。

Collectively, our mid-year results show that we continue to make progress on managing the company with and toward a Rule of 40 mindset. As a reminder, we define Rule of 40 as the combination of ACV growth and free cash flow margin. Achieving the Rule of 40 milestone is a very important one for all of us at Pega. Reaching this goal will provide us with another reason to be proud of the business we're running.

總的來說，我們的年中業績表明，我們在以 40 條規則的思維方式管理公司方面繼續取得進展。提醒一下，我們將 40 規則定義為 ACV 增長和自由現金流利潤率的組合。實現 40 條規則的里程碑對於 Pega 的所有人來說都是非常重要的。實現這一目標將為我們提供另一個為我們所經營的業務感到自豪的理由。

Generating strong free cash flow provides the fuel for Pega to invest in our business and to provide outstanding support to our clients, and it gives us the financial strength and flexibility to navigate through any uncertain economic environment. For example, in the first half of 2023, our cash and marketable security balance grew, providing us with the ability to spend about $90 million on repurchases of our convertible debt at a discount. At the end of Q2, our outstanding convertible debt balance was approximately $500 million.

產生強勁的自由現金流為 Pega 投資我們的業務和為我們的客戶提供出色的支持提供了動力，並為我們提供了應對任何不確定的經濟環境的財務實力和靈活性。例如，2023 年上半年，我們的現金和有價證券餘額增長，使我們有能力花費約 9000 萬美元以折扣價回購可轉換債券。截至第二季度末，我們的未償可轉換債務餘額約為 5 億美元。

As we outlined in our investor session during PegaWorld in June, we see 3 major levers to achieve the free cash flow margin necessary to attain the Rule of 40. The first is expanding total gross margin, which is a function of Pega Cloud gross margin; term maintenance gross margin; and our professional services gross margin. Improving Pega Cloud gross margin will be the biggest driver of total gross margin improvement.

正如我們在6 月份PegaWorld 投資者會議上概述的那樣，我們看到了實現40 法則所需的自由現金流利潤率的3 個主要槓桿。第一個是擴大總毛利率，這是Pega Cloud 毛利率的函數；期限維持毛利率；以及我們的專業服務毛利率。 Pega Cloud毛利率的提升將是總毛利率提升的最大推動力。

We expect to improve Pega Cloud gross margin by continuing to scale Pega Cloud, increasing automation and implementing multi tenancy in Kubernetes. On a trailing 12-month basis, Pega Cloud revenue is now $423 million, up from about $50 million just a few years ago. In the first half of 2023, Pega Cloud's gross margin improved from 68% to 73% year-over-year.

我們希望通過繼續擴展 Pega Cloud、提高自動化程度以及在 Kubernetes 中實施多租戶來提高 Pega Cloud 的毛利率。根據過去 12 個月的數據，Pega Cloud 的收入目前為 4.23 億美元，而幾年前的收入約為 5000 萬美元。 2023年上半年，Pega Cloud的毛利率同比從68%提升至73%。

The second major lever that will drive operating leverage is in the area of sales and marketing. This is certainly the most difficult of the 3 to tackle. We continue to balance our need to invest in sales and marketing to drive ACV growth with our need to improve sales efficiency. We certainly have a lot of work to do.

推動運營槓桿的第二個主要槓桿是銷售和營銷領域。這無疑是這三個問題中最難解決的一個。我們繼續平衡投資銷售和營銷以推動 ACV 增長的需求與提高銷售效率的需求。我們當然還有很多工作要做。

In the last few months, we've received feedback from our clients, partners and employees on ways to further simplify client engagement to drive greater success. We're evaluating all of these suggestions to improve our go-to-market effectiveness, and we plan to implement changes in the second half of the year to continue driving improvement in our go-to-market productivity.

在過去的幾個月中，我們收到了客戶、合作夥伴和員工的反饋，了解如何進一步簡化客戶互動以取得更大的成功。我們正在評估所有這些建議，以提高我們的上市效率，併計劃在今年下半年實施變革，以繼續提高我們的上市生產力。

The third and final major lever that will improve our operating leverage is in the area of research and development and G&A. The approach here is simple. We plan to increase R&D and G&A spending at a slower rate than we expect to grow the company. Delivering best-in-class innovation to our clients continues to be critical to our success. We will continue to invest heavily in R&D. However, we believe we can do so in a manner that still improves our efficiency.

提高我們運營槓桿的第三個也是最後一個主要槓桿是研發和一般管理費用領域。這裡的方法很簡單。我們計劃增加研發和一般行政支出的速度低於我們對公司發展的預期。為客戶提供一流的創新仍然是我們成功的關鍵。我們將繼續大力投資研發。然而，我們相信我們可以以仍然提高效率的方式做到這一點。

As you can tell, we're very focused on growth, expanding gross margin, improving sales efficiency and increasing operating leverage. The companies that are successful in navigating uncertain economic times like the environment we're in today typically are ones that focus on growth, expense management and generating free cash flow. It's very reassuring to our clients that Pega maintains the financial strength to continue providing outstanding customer support and product innovation.

正如您所知，我們非常注重增長、擴大毛利率、提高銷售效率和提高運營槓桿。那些能夠成功應對像我們今天所處的環境這樣的不確定經濟時期的公司通常是那些專注於增長、費用管理和產生自由現金流的公司。 Pega 擁有足夠的財務實力來繼續提供出色的客戶支持和產品創新，這讓我們的客戶非常放心。

Before I wrap up, I've been asked to offer a few thoughts on modeling our business in the second half of 2023. As a reminder, the third quarter of the year is typically one of the lightest-term-license-revenue quarters of the year due to seasonality. That's because we often book far fewer renewals of term license agreements in that period. In contrast, the final quarter of the year is typically a relatively stronger-term-license-revenue quarter because we, like most enterprise software companies, experience a higher level of contract renewals in the last quarter of the fiscal year.

在結束之前，我被要求就 2023 年下半年的業務建模提供一些想法。提醒一下，今年第三季度通常是 2023 年期限許可收入最輕的季度之一。由於季節性原因，年份。這是因為我們在此期間預訂的定期許可協議續訂次數通常要少得多。相比之下，一年的最後一個季度通常是一個相對強勁的期限許可收入季度，因為我們像大多數企業軟件公司一樣，在本財年的最後一個季度經歷了更高水平的合同續簽。

In conclusion. It was great seeing so many of you in person during our investor session in June, at PegaWorld in Las Vegas. And I'm looking forward to seeing all of you as we get back on the road in August and September.

綜上所述。很高興在 6 月份在拉斯維加斯 PegaWorld 舉行的投資者會議上見到你們這麼多人。我期待著在八月和九月重新上路時見到你們所有人。

Operator, at this time, please open the line for questions.

接線員，此時請開通線路提問。

(Operator Instructions) Our first question comes from Steve Enders with Citi.

（操作員說明）我們的第一個問題來自花旗銀行的 Steve Enders。

Okay, great. I guess I just want to ask first on kind of what you are seeing out there in the macro situation and some of the uncertainty with customer budget and, I guess, how that relates into the sequential decline that we saw here on the ACV line in the quarter?

好的，太好了。我想我只是想首先問一下您在宏觀形勢中看到的情況以及客戶預算的一些不確定性，我想這與我們在 ACV 線上看到的連續下降有何關係季度？

So let me -- Steve, it's Ken. Let me hit on the second part of your question. And then I'll hand over to Alan to give a perspective on the market landscape. So it is unusual to have a decline in ACV sequentially in a quarter. It's not unheard of, especially in a situation where we had such a strong build in the first quarter. There's a lot of anomalies that pop up in a quarter around renewals and we do have some churn in clients. It doesn't always happen linear.

所以讓我——史蒂夫，我是肯。讓我談談你問題的第二部分。然後我將請艾倫提供對市場格局的看法。因此，ACV 在一個季度內連續下降是不尋常的。這並非聞所未聞，尤其是在我們第一季度擁有如此強大的實力的情況下。在續約方面，一個季度會出現很多異常情況，我們確實有一些客戶流失。它並不總是線性發生。

We actually have consumption agreements that reset at different points in the way we calculate ACV. So we tend to not look at things in such a small discrete period as a quarter and think about things over a trailing 12 months kind of view. So like I said, it is unusual to see that happen, but it is not something that we believe is systemic. And we don't think it impacts our ability for -- to drive toward our full year results. So I'll hand back to Alan on the view -- on his view of the market.

實際上，我們的消費協議會在計算 ACV 的方式的不同點重置。因此，我們往往不會以季度這樣一個小的離散時期來看待事物，而是從過去 12 個月的角度來思考事物。所以就像我說的，這種情況發生是不尋常的，但我們認為這不是系統性的事情。我們認為這不會影響我們實現全年業績的能力。因此，我將向艾倫傳達他對市場的看法。

Yes. So I think the market is definitely being conservative. We're seeing more approvals, sometimes popping in at the last moment, having some things that you would have expected, would have just closed in a matter for us -- and some of which have since closed but that just took longer.

是的。所以我認為市場肯定是保守的。我們看到更多的批准，有時是在最後一刻突然出現的，有一些你所期望的事情，本來會在我們的問題上結束——其中一些已經結束，但只是需要更長的時間。

I think that, in the companies that are our clients, there is definitely an extra level of scrutiny that is going on, which I've seen before and in other times when there was uncertainty and I think we know how to deal with it -- well, I know we know how to deal with it, but I do know that -- I'm expecting that this is going to be true for a lot of other companies and it's going to be true possibly for the next quarter or 2. I don't think it affects our long-term prospects in any way, though.

我認為，在我們的客戶公司中，肯定會進行額外級別的審查，我以前和在其他存在不確定性的時候都見過這種情況，我認為我們知道如何處理它 - - 嗯，我知道我們知道如何處理它，但我確實知道- 我預計這對於許多其他公司來說都是如此，並且可能在下一個或兩個季度都是如此.不過，我認為這不會以任何方式影響我們的長期前景。

Okay, no, that's helpful context there and I appreciate the comments around that. I guess, kind of given the budget situation that we're talking about here and the excitement around AI, how are you thinking about the path to monetization for all of the new functionality that you've talked about and released at PegaWorld last month and how customers are kind of feeling about those investments in Pega AI going forward?

好吧，不，這是有用的背景，我很欣賞周圍的評論。我想，考慮到我們在這裡討論的預算情況以及圍繞人工智能的興奮，您如何考慮上個月在 PegaWorld 上討論和發布的所有新功能的貨幣化路徑？客戶對Pega AI 未來的投資有何看法？

Well, look. Customers are being bombarded with every company they talk to, even ones that I'm sure they're trying to avoid, coming and offering AI miracles to them. I -- the hype cycle here is -- actually I think it might be unprecedented, to tell you the truth. The reality, though, is we have a lot of credibility with our clients, particularly when we can show them the real types of things that we were able to show at PegaWorld and that you can see in some of the videos that we posted.

嗯，看看。客戶正受到與他們交談的每一家公司的轟炸，甚至是那些我確信他們試圖避免的公司，向他們提供人工智能奇蹟。我——這裡的炒作週期是——實際上，告訴你真相，我認為這可能是前所未有的。但現實是，我們對客戶有很高的可信度，特別是當我們可以向他們展示我們能夠在PegaWorld 展示的真實類型的東西時，以及您可以在我們發布的一些視頻中看到的東西時。

So there is a tremendous amount of interest. And I think we have a lot of confidence from our clients that the way we're going to do it is going to be a way that really works. We are seeing, as we've seen in the past, a lot of customers doing their own experimentation. A lot of customers, as you would expect, are putting their toes, dipping their toes in a lot of ponds, all right? We're seeing the same with analytics too, that there's just a lot of, "Oh, my god. How do I figure out how to get the value out of my data? How do I drive expense out? How do I do everything from -- create better end-to-end automation to be able to have the AI do summarization that otherwise the human would have to do?"

因此，人們對此產生了極大的興趣。我認為我們的客戶對我們充滿信心，我們的做法將是一種真正有效的方式。正如我們過去所看到的那樣，我們看到很多客戶都在進行自己的實驗。正如您所預料的那樣，很多顧客都在嘗試，把腳趾浸入很多池塘里，好嗎？我們在分析中也看到了同樣的情況，有很多這樣的問題，“天哪。我如何弄清楚如何從我的數據中獲取價值？我如何減少開支？我如何做所有事情從——創建更好的端到端自動化，以便能夠讓人工智能進行總結，否則人類就必須這樣做？”

So there's so much activity and interest. I think we're doing well, I've been in a lot of meetings in which we've had a discussion explaining why the Pega approach is differentiated, why it's architecturally superior, and I know customers are taking that very, very seriously. And I expect it will lead to -- as I said, in the 3 ways we think of monetizing this, I think it will lead to greater usage, and we're already primed for that greater usage. It will lead to better outcomes for them and good outcomes for us.

所以有很多活動和興趣。我認為我們做得很好，我參加過很多會議，我們在會議中進行了討論，解釋為什麼 Pega 方法與眾不同，為什麼它在架構上優越，而且我知道客戶非常非常重視這一點。我預計這將導致——正如我所說，在我們認為貨幣化的三種方式中，我認為這將導致更多的使用，而且我們已經為更大的使用做好了準備。這將為他們帶來更好的結果，也為我們帶來更好的結果。

Our next question comes from Kevin Kumar with Goldman Sachs.

我們的下一個問題來自高盛的凱文·庫馬爾。

I had one on cash flow which was very strong in the first half of the year. Ken, I know you updated guidance during Investor Day, the $180 million for the year. It feels like you're tracking ahead of that number, particularly given 4Q tends to be a strong quarter. Is that still the right way to think about that? Anything else you would call out in terms of kind of the cadence of cash flow for the year?

我的現金流在上半年非常強勁。肯，我知道您在投資者日期間更新了指導，即今年 1.8 億美元。感覺你正在跟踪這個數字，特別是考慮到第四季度往往是一個強勁的季度。這仍然是正確的思考方式嗎？關於今年現金流的節奏，您還有什麼想說的嗎？

Kevin, thanks for your question. So it would be silly for me to suggest that being where we are at the midway point doesn't -- isn't a good thing in terms of us achieving our cash flow for the year. And I certainly don't think that $150 million or $180 million or whatever number we have is something where we'll just stop and say, "Oh, we've achieved that. We're good for the year." So we're going to try to generate as much cash flow as we can because we know that, the more cash flow that we generate this year just means that our structure is set up to generate cash flow in future years.

凱文，謝謝你的問題。因此，我認為，就我們實現今年的現金流而言，我們目前所處的中間點並不是一件好事，這對我來說是愚蠢的。我當然不認為 1.5 億美元或 1.8 億美元或我們擁有的任何數字會讓我們停下來說：“哦，我們已經實現了這一目標。我們今年表現不錯。”因此，我們將嘗試產生盡可能多的現金流，因為我們知道，今年產生的現金流越多，就意味著我們的結構已建立為在未來幾年產生現金流。

So I would say we're not updating or adjusting guidance, but I would say we're very pleased with where we are. And we think it bodes well for the future of increasing cash flow for Pega.

所以我想說我們不會更新或調整指導，但我想說我們對目前的情況非常滿意。我們認為這對於 Pega 現金流增加的未來來說是個好兆頭。

I'll also say that the mood at the company is -- has really, I believe, come a long, long way in adopting a culture of balance, of trying to head towards Rule of 30 this year, Rule of 40 next year. And so it's -- it wasn't like the cash just fell out of the sky. It's that people are doing the right things. You're thinking about both being more economical but also how to, to be candid, bump up that critical component being a Rule of 30 and 40 company. It's part of everybody's complaint. So it's one of those things that -- a little extra attention helps a lot.

我還要說的是，我相信，公司在採用平衡文化方面確實取得了很大的進步，努力今年實現 30 條規則，明年實現 40 條規則。所以，現金並不是從天上掉下來的。而是人們在做正確的事情。您不僅要考慮更加經濟，而且坦率地說，還要考慮如何提高 30 和 40 規則公司的關鍵組成部分。這是每個人抱怨的一部分。所以這是其中之一——一點額外的關注會有很大幫助。

That's great. I had one on -- just on Europe. Looking at the segment revenue details, it implies, I think, Europe accelerated revenue growth in the first half. Is that maybe just catch-up? And is there anything you'd call out in terms of potential recovery in some of those different regions? And anything you're hearing from your customer base?

那太棒了。我有一個關於歐洲的節目。從部門收入細節來看，我認為這意味著歐洲上半年收入加速增長。這也許只是追趕？對於某些不同地區的潛在復蘇，您有什麼建議嗎？您從客戶群那裡聽到了什麼？

Yes. That -- I will say don't -- please be careful with how much you look into segment reporting for regions on revenue, because remember a lot of our revenue still is term license revenue under ASC 606. And so the mix and the timing can somewhat just be -- just happens to be the way the revenue flowed between the geos. I would say, that said, we have not seen a noticeable change in the theaters in the first half of the year in terms of positive or negative. I just think sometimes the revenue flow is different, Kevin. So that, I -- it's more that than it is actual economic changes.

是的。那 - 我會說不要 - 請小心你對收入地區的細分報告的關注程度，因為記住我們的很多收入仍然是 ASC 606 下的定期許可收入。所以混合和時間安排在某種程度上可能只是——恰好是收入在地理區域之間流動的方式。我想說，話雖如此，今年上半年我們還沒有看到影院發生明顯的積極或消極變化。我只是認為有時候收入流是不同的，凱文。所以，我——這不僅僅是實際的經濟變化。

Our next question comes from Rishi Jaluria with RBC Capital Markets.

我們的下一個問題來自 RBC 資本市場的 Rishi Jaluria。

Wonderful. First, I wanted to kind of drill a little bit back into the consumption element of the business. At the Analyst Day, you had said that part of the goal of Generative AI is driving more consumption. Maybe can you give us a little bit of a reminder for, today how much of your business is actually consumption? And as we think about the actual adoption of Generative AI solutions, how that impacts the mix of consumption versus subscription. And maybe what does that do to some of the leading metrics like ACV and RPO that we're all still looking at? And then I've got a follow-up.

精彩的。首先，我想稍微回顧一下業務的消費元素。在分析師日，您曾說過生成式人工智能的部分目標是推動更多消費。也許您可以提醒我們一下，今天您的業務中有多少實際上是消費？當我們思考生成式人工智能解決方案的實際採用時，這將如何影響消費與訂閱的組合。也許這對我們仍在關注的一些主要指標（例如 ACV 和 RPO）有何影響？然後我有一個後續行動。

So let me start with that, and then Alan can fill in the gaps. So just a reminder for us. And it -- when we say consumption, we don't mean a contract that is paid by the drink with no commitments from the clients. What we mean is that a contract is based on a usage or a consumption metric and that increase in that metric allows a sharing of value between our clients getting more value from using the solution and us achieving more value from those commitments.

那麼讓我從這個開始，然後艾倫可以填補空白。所以只是給我們一個提醒。當我們說消費時，我們並不是指在沒有客戶承諾的情況下通過飲料支付的合同。我們的意思是，合同基於使用或消耗指標，並且該指標的增加允許我們的客戶從使用解決方案中獲得更多價值，而我們從這些承諾中獲得更多價值。

If -- when you think about our contract consumption, meaning a model that our contracts are based on a consumption or usage metric, it's -- well above 50% of our contracts are actually using a usage-type metric or a consumption-type metric. In terms of the amount of our ACV or revenue that is driven by variances from contractually committed arrangements with our clients, meaning overages or variances, it's still a relatively small part of our business that comes from clients going over their contractual.

如果——當你考慮我們的合同消耗時，即我們的合同基於消耗或使用指標的模型，那麼——遠高於 50% 的合同實際上使用使用類型指標或消費類型指標。就我們與客戶簽訂的合同承諾安排的差異（即超額或差異）驅動的 ACV 或收入金額而言，來自客戶超出合同的業務仍然只占我們業務的相對較小部分。

Normally what happens with clients is, when they get to that point, we re-contract with them with new commitments.

通常情況下，當客戶達到這一點時，我們會與他們重新簽訂新的承諾合同。

So most of the agreements, and I think just to clarify what Ken is saying there, because I think it's a really interesting and important point. We did some things several years ago when we began wanting to move to a more non-seat-based model to a model that was based on the quantity of work, to converge the concepts of subscription and consumption.

所以大多數協議，我認為只是為了澄清肯在那裡所說的內容，因為我認為這是一個非常有趣且重要的觀點。幾年前，我們做了一些事情，當時我們開始希望從基於非席位的模型轉向基於工作量的模型，以融合訂閱和消費的概念。

So what we found is that clients really don't like it when the amount they have to pay bounces around too much from one quarter to another. It makes it hard for them to budget. It can feel unpredictable, particularly if it ends up being driven by some external circumstance, that suddenly something falls out, a lot more items or lot more exceptions, lot more calls to the call center. So the quarter-to-quarter variation was something we wanted to avoid, but on the other hand, we want to accommodate customers whose business was increasing even as their seats were decreasing.

所以我們發現，客戶真的不喜歡他們必須支付的金額從一個季度到另一個季度跳動太多。這讓他們很難制定預算。它可能讓人感覺不可預測，特別是如果它最終是由某些外部環境驅動的，突然有東西掉下來，更多的物品或更多的異常，更多的呼叫中心電話。因此，季度與季度之間的變化是我們想要避免的，但另一方面，我們希望適應業務增長的客戶，即使他們的座位在減少。

So what we basically typically do, as Ken said, to avoid having it bounce too much for a customer from quarter to quarter is, instead of doing overage charges, we use the increased level of use, the increased consumption, to reset a new subscription price so that it reflects itself in the go-forward ACV and it becomes something that candidly is a lot easier for the customer to budget and understand. And I think it's actually easier for us to administer, but I don't believe that was the method of motivation. Does that make sense, Rishi?

因此，正如肯所說，為了避免每個季度的客戶反彈太多，我們通常所做的就是，我們不收取超額費用，而是使用增加的使用水平、增加的消費來重置新的訂閱價格，以便它反映在未來的ACV 中，並且坦率地講，它對於客戶來說更容易預算和理解。我認為這實際上對我們來說更容易管理，但我不認為這是激勵的方法。這有道理嗎，Rishi？

Yes. That's a very thorough answer. I really appreciate it, guys. And then...

是的。這是一個非常徹底的答案。我真的很感激，伙計們。進而...

I want to -- Rishi, I'm going to answer one part of your question that we didn't answer, backlog, RPO. When you move to more consumption- or usage-based models, there is a chance that a contract duration would come down slightly. And so that could actually be a headwind to RPO growth slightly, not materially, but slightly. So that's your second -- one part of your question there, just to clarify that. And the reason why that is, is we want faster iterations of measuring our clients' usage to be able to grow ACV. Longer durations tend to lock-in usage for longer periods of time. So that's the RPO answer.

我想 -- Rishi，我將回答您問題中我們沒有回答的一部分，即積壓工作、RPO。當您轉向更多基於消費或使用的模型時，合同期限可能會略有縮短。因此，這實際上可能對 RPO 增長產生輕微的阻力，不是實質性的，而是輕微的。這是你的第二個問題——你的問題的一部分，只是為了澄清這一點。原因是我們希望更快地迭代測量客戶的使用情況，以便能夠增長 ACV。持續時間越長，往往會鎖定使用時間越長。這就是 RPO 的答案。

Okay. Great. And just to clarify, that shouldn't have an impact on CRPO or RPO with 1 year or under, correct?

好的。偉大的。澄清一下，這不應該對 1 年或以下的 CRPO 或 RPO 產生影響，對嗎？

No, no. It would be -- it would highly unlikely to impact current RPO, yes.

不，不。是的，它極不可能影響當前的 RPO。

Okay. Really helpful. And then one other piece of feedback we got when we were talking to partners at PegaWorld is that Generative AI can really help speed up time to value. Maybe based on your customer conversations, how do we think about the potential for this to reduce implementation times, reduce sales cycles, and kind of lead to, maybe over time better net new business showing up in the model? Maybe help us understand how you're thinking about that?

好的。真的很有幫助。當我們與 PegaWorld 的合作夥伴交談時，我們得到的另一條反饋是，生成式人工智能確實可以幫助加快實現價值的時間。也許根據您與客戶的對話，我們如何看待這種減少實施時間、縮短銷售週期以及隨著時間的推移可能會導致更好的淨新業務出現在模型中的潛力？也許可以幫助我們了解您的想法？

I think it's going to be huge. When I did my closing at PegaWorld, and the video is still up there, I talked about 4 things that I expected to come back to that audience with the following year. And I want you to know that the company is galvanized around working as hard as we can to make sure we deliver on these things. The first was what we call Pega at your fingertips. So using the power of Generative AI, including some of the things that are going to be in '23, to be able to make it so the system is giving people building the software advice.

我認為這將會是巨大的。當我在 PegaWorld 閉幕時，視頻仍然在那裡，我談到了我預計明年會回到觀眾面前的 4 件事。我想讓你們知道，公司正在盡最大努力確保我們實現這些目標。第一個是我們所說的觸手可及的 Pega。因此，利用生成式人工智能的力量，包括 23 年將出現的一些東西，能夠使系統為人們提供構建軟件的建議。

It's also going to be able to give end users who are using the software advice and even do work for them. So that was the first of the 4. The second was we expect to double developer productivity as a direct result of the implementation of these features. And relative to what you were asking about, I think this is unquestionably going to increase the velocity of sales cycles and it's going to make it easier for customers to get a lot more done with the same dollars.

它還將能夠為使用該軟件的最終用戶提供建議，甚至為他們工作。這是四個中的第一個。第二個是我們希望通過實施這些功能來直接提高開發人員的生產力。相對於你所問的問題，我認為這無疑會提高銷售週期的速度，並且會讓客戶更容易用同樣的錢完成更多的事情。

And so we're working to get our partners excited about how this will let them do more for the same amount, which should improve their sales cycles as well. So -- and the final 2, as you may remember, were the concepts of Launchpad and the autonomous enterprise.

因此，我們正在努力讓我們的合作夥伴感到興奮，因為這將讓他們以同樣的金額做更多的事情，這也應該改善他們的銷售週期。所以，最後兩個，你可能還記得，是 Launchpad 和自治企業的概念。

Our next question comes from Pinjalim Bora with JPMorgan.

我們的下一個問題來自摩根大通的 Pinjalim Bora。

Great. I wanted to ask you one thing that you were talking in the script, about more opportunity to further streamline sales, additional improvements to go-to-market. Is there any way to kind of tease that out? What other things are you thinking that you can apply?

偉大的。我想問你在劇本中談到的一件事，關於進一步簡化銷售的更多機會，以及對上市的額外改進。有什麼辦法可以解決這個問題嗎？您認為還可以應用哪些其他內容？

Yes. We've just begun sharing that with the company. And I'm going to spend some time today talking with the company as a whole about what we're doing, but in principle, we're going to make it so in a couple of the roles and functions that historically have been kind of segmented out, are going to become less siloed in the front office and the go-to-market. The work of people that we call success managers and people we call account executives and other sorts of roles and functions that are in there that were specialists in certain areas.

是的。我們剛剛開始與公司分享這一點。今天我將花一些時間與整個公司討論我們正在做的事情，但原則上，我們將在歷史上一直存在的幾個角色和職能中做到這一點進行細分，在前台和進入市場方面將變得不那麼孤立。我們稱之為成功經理的人、我們稱之為客戶主管的人以及其他類型的角色和職能人員的工作，他們是某些領域的專家。

We're going to work to bring them under a common organizational and management structure. So -- that, I believe, is once again going to continue to make us more effective. We've certainly gotten feedback from our clients that it will be easier for them to deal with more focused teams. And I think of it as just really a continuation of some of the things we started in January. I do believe it will improve sales efficiency, but that is not the primary driver here.

我們將努力將它們置於共同的組織和管理結構之下。因此，我相信，這將再次繼續提高我們的效率。我們確實從客戶那裡得到了反饋，他們會更容易與更專注的團隊打交道。我認為這實際上是我們一月份開始的一些事情的延續。我確實相信這會提高銷售效率，但這並不是主要驅動力。

Got it. Understood. And Ken, going back to kind of the sequential decline in ACV, was the macro sequentially worse in Q2 versus Q1? Anything to note there?

知道了。明白了。肯，回到 ACV 的連續下降，第二季度的宏觀經濟狀況是否比第一季度連續惡化？那裡有什麼要注意的嗎？

I don't believe the macro was worse. I think our performance in Q1 was better than our performance in Q2. And naturally that contributes, but that -- Pinjalim, that actually happens in a business like ours where we have smaller numbers of deals. Where the deals are larger value, you tend to not get kind of like -- it's not like a statistical like kind of trend in terms of the bookings. So that's not that unusual to see in our business.

我不認為宏觀情況更糟。我認為我們第一季度的表現比第二季度的表現更好。這自然是有貢獻的，但是 Pinjalim，這實際上發生在像我們這樣的交易數量較少的企業中。當交易價值較大時，你往往不會得到類似的信息——這不像預訂方面的統計趨勢。因此，這種情況在我們的業務中並不罕見。

Our next question comes from Jake Roberge with William Blair.

我們的下一個問題來自傑克·羅伯格和威廉·布萊爾。

I just wanted to dig deeper into your comments that Generative AI can commoditize just those lower-end use cases in low code. Can you just talk more about why your platform's positioning helps you take advantage of AI? And then just from a timing perspective, when do you think we can actually start seeing AI layer into the model? Is that something that's more Q4, or do you think that's more of a 2024 story?

我只是想更深入地了解您的評論，即生成式人工智能可以用低代碼將那些低端用例商品化。您能否詳細談談為什麼您的平台定位可以幫助您利用人工智能？然後從時間角度來看，您認為我們什麼時候可以真正開始將人工智能層納入模型中？這更像是第四季度的故事，還是你認為這更像是 2024 年的故事？

Could you repeat the second question? I'm sorry. You said, when can we start seeing...

你能重複一下第二個問題嗎？對不起。你說，我們什麼時候才能開始見……

Yes. It was just really around the timing of when we can start seeing AI layer into the model. Is that something that starts generating revenue in Q4, or is that more of a 2024 story?

是的。這確實是我們可以開始在模型中看到人工智能層的時間。這是在第四季度開始產生收入的事情，還是更多是 2024 年的故事？

So a couple of different things there, all of which I think are terrific actually. So the reality is a lot of what you see are people building systems using AI by using them as an accelerator for traditional coding. Think about copilot, using it to even generate in the low-code area and tie your systems. The trouble with a system that's generated like that is it's really hard to change.

所以有一些不同的東西，我認為所有這些實際上都很棒。因此，現實情況是，人們使用人工智能構建系統，將其用作傳統編碼的加速器。想想 copilot，使用它甚至可以在低代碼區域生成並綁定您的系統。這樣生成的系統的問題在於它真的很難改變。

It doesn't have a structure that makes it easy for you to go in and say, "Oh, Italy wants to do something differently. How do I go change this set of things for Italy?" Because candidly, when the generated stuff happens, it tends to kind of get generated in cloud server in a way it is not necessarily organized to change. The layer cake in Pega lets you organize the key dimensions of change. We find that in businesses and enterprises, change typically happens for 1 of 3 reasons.

它沒有一個讓你很容易進去說：“哦，意大利想要做一些不同的事情。我該如何為意大利改變這一系列事情？”的結構。因為坦率地說，當生成的東西發生時，它往往會在雲服務器中以一種不一定有組織來改變的方式生成。 Pega 中的夾心蛋糕可讓您組織變化的關鍵維度。我們發現，在企業和企業中，變革通常因以下三個原因之一而發生。

You generally get a general way you want to do a process and make a set of decisions, and they will vary based on a product variation or a customer variation or a jurisdictional variation or locational variation. And we have built those dimensions into this layer cake. So when you want to make a change or how something works for Italy or how you handle particularly a high-value set of clients, you've got a place to go. You've got a place to go in the layer cake that you can -- we generate those pieces, as opposed to having to deal with something that looks a lot more like soup.

通常，您會獲得執行流程並做出一系列決策的一般方式，並且它們會根據產品變化、客戶變化、司法管轄區變化或位置變化而變化。我們已將這些尺寸構建到了這個層蛋糕中。因此，當您想要做出改變或改變某些事情如何適合意大利或如何處理特別是高價值客戶時，您有一個地方可以去。你可以在千層蛋糕中找到一個可以去的地方——我們生成這些塊，而不是必須處理看起來更像湯的東西。

Now the soup doesn't matter as much in small systems. So I think it's going to be used extensively there, but in anything that you'd think of as an enterprise solution, really important to have that structure. And this will be hitting the streets this year. So this is going to be something that our customers -- when '23 ships this summer, this is going to be in the hands of customers.

現在，湯在小型系統中不再那麼重要了。因此，我認為它將在那裡廣泛使用，但在您認為是企業解決方案的任何事物中，擁有這種結構非常重要。今年它將出現在街頭。因此，這將成為我們客戶的東西——當 '23 今年夏天發貨時，這將交到客戶手中。

Okay, helpful. And then just we're obviously hearing a lot about platform consolidation, just given the uncertain macro. Have you seen any changes to the competitive environment or even with your GSI partnerships just as some of the larger software platforms like Microsoft and ServiceNow invest more in the space? And then on the other end, have you started to benefit at all just as customers may look to consolidate like a point solution RPA or process mining vendor onto your broader platform?

好的，有幫助。然後，考慮到宏觀經濟的不確定性，我們顯然聽到了很多關於平台整合的消息。您是否看到競爭環境甚至與您的 GSI 合作夥伴關係發生任何變化，就像 Microsoft 和 ServiceNow 等一些較大的軟件平台在該領域投入更多資金一樣？另一方面，您是否已經開始受益，就像客戶可能希望像單點解決方案 RPA 或流程挖掘供應商一樣將其整合到您更廣泛的平台上？

Yes. We're seeing actually some real benefits from platform consolidation in the pipeline and actually in real implemented systems where some of our clients are using us to do more of their workflows. And I think that's actually a larger source of benefit for us than the consolidation across different product families like process mining versus robotic automation. But yes, I do think we are going to see some consolidation. And I would expect, based on where our history has been when this sort of thing has happened, that, that is beneficial for us.

是的。我們實際上看到了管道中的平台整合以及實際實施的系統中的一些真正的好處，在這些系統中，我們的一些客戶正在使用我們來完成更多的工作流程。我認為這實際上比不同產品系列（例如流程挖掘與機器人自動化）的整合對我們來說是更大的利益來源。但是，是的，我確實認為我們將會看到一些整合。我預計，根據我們的歷史，當這種事情發生時，這對我們是有利的。

Our next question comes from Vinod Srinivasaraghavan from Barclays.

我們的下一個問題來自巴克萊銀行的 Vinod Srinivasaraghavan。

I just want to follow up on some of the macro and GenAI questions you've talked about. And so far, it seems like you're seeing some offsetting demand factors between GenAI starting to help but macro still being kind of more of a negative factor. When do you expect this tug-of-war to kind of start to favor GenAI over macro and kind of start to show up in a stronger pipeline and then really start to show up in net new ACV growth?

我只是想跟進一下您談到的一些宏觀和 GenAI 問題。到目前為止，您似乎看到 GenAI 之間的一些抵消需求因素開始提供幫助，但宏觀仍然是一種更多的負面因素。您預計這場拉鋸戰什麼時候會開始有利於 GenAI 而不是宏觀，並開始出現在更強大的管道中，然後真正開始出現在新的 ACV 淨增長中？

Yes, I think that net new ACV -- I think the tug-of-war is won by real things in the hands of real customers. If you look at what's out there, a lot of -- there's a lot of stuff including ours, which hasn't fully hit the street yet. And I think, as that hits the street, we're going to see it do a much harder tug in that direction.

是的，我認為淨新ACV——我認為這場拉鋸戰是由真正的客戶手中的真實產品贏得的。如果你看看外面有什麼，就會發現很多——包括我們的在內的很多東西還沒有完全上市。我認為，當它出現在大街上時，我們將看到它朝這個方向做更艱難的拉扯。

I also think some of the macro just represents greater conservatism, just extra layers of approvals or "run it by the CFO at the end twice," that was not candidly present as much as we entered the year, but isn't at all shocking given the uncertainty and everybody is trying to save money in this environment. So I'm very excited. We need to -- to be able to achieve our Rule of 40 ambitions for next year, we need a good road rally and we're still psyched to be able to do that.

我還認為，一些宏觀政策只是代表了更大的保守主義，只是額外的批准層或“最終由首席財務官運行兩次”，這並沒有像我們進入今年那樣坦率地出現，但一點也不令人震驚考慮到不確定性，每個人都在這種環境下努力省錢。所以我很興奮。我們需要——為了能夠實現明年的 40 規則雄心，我們需要一場良好的公路拉力賽，我們仍然很高興能夠做到這一點。

Understood. And then just maybe on the Rule of 40, your progression and scaling of Pega Cloud and gross margins. At PegaWorld, I saw you guys were hoping to adopt externalized services for micro services, I think, by Infinity '24, with a more full deployment by the year after that. How should we think about kind of modeling Pega Cloud gross margin as you kind of hit those milestones?

明白了。然後也許根據 40 規則，您的 Pega Cloud 和毛利率的進步和擴展。在 PegaWorld，我看到你們希望通過 Infinity '24 採用微服務的外部化服務，並在之後的一年進行更全面的部署。當您達到這些里程碑時，我們應該如何考慮對 Pega Cloud 毛利率進行建模？

Yes. So we wanted to get -- the way I would frame it is, way back when, when we started this, like, 5 years ago, we said we want to get Pega Cloud gross margin to 70%. A couple of years ago, we said we're going to change that number to 75%. We're now pretty close to 75% and we've talked about that there's no reason why that number can't go and approach 80% in the coming years. So I would model it kind of in a more linear fashion. That is probably one part of our business that actually does have linearity in terms of the scaling. So I would probably think about it that way.

是的。所以我們想要——按照我的框架方式，早在 5 年前，當我們開始這項工作時，我們就說我們希望將 Pega Cloud 的毛利率提高到 70%。幾年前，我們曾說過要將該數字改為 75%。我們現在已經非常接近 75%，而且我們已經討論過，這個數字沒有理由不能在未來幾年接近 80%。所以我會以更線性的方式對其進行建模。這可能是我們業務的一部分，實際上在擴展方面確實具有線性關係。所以我可能會這樣想。

And we're putting improvements online every quarter.

我們每個季度都會在線進行改進。

Our next question comes from Fred Havemeyer with Macquarie.

我們的下一個問題來自麥格理的 Fred Havemeyer。

I think I was coming in with more technical-focused questions, but something kind of tickled my fancy. So I wanted to ask, I think, maybe for Alan. As we think about the opportunity here to potentially improve how customer service, sales, et cetera are done with the aid of Generative AI. I mean, you have all of the pieces in place to do things like autonomous agents for enterprise and the likes, but just wanted to ask you, what do you think about the opportunities to kind of like augment or improve how customer service is done more efficiently with Generative AI?

我想我是帶著更多以技術為中心的問題進來的，但有些東西激起了我的興趣。所以我想，也許是為了艾倫。當我們思考這裡有機會在生成式人工智能的幫助下改善客戶服務、銷售等方面的工作方式時。我的意思是，您已經具備了完成諸如企業自主代理之類的工作的所有條件，但只是想問您，您對增強或改進客戶服務方式的機會有何看法高效地使用生成式人工智能？

I think it's enormous. I think it's enormous in an assisted sense and I also think that it's going to really fundamentally change the way self-service works as well, which is why I'm glad we're not tied to seat counts. Because -- let's face it. One of the big cost savings that people are achieving and want to achieve is the reduction of labor that they have trouble finding, anyway. And so I think it's going to be a really perfect storm in that direction. And I do think that we do have a terrific collection of the parts to deliver on that frontline. So, things would be great.

我認為這是巨大的。我認為它在輔助意義上是巨大的，而且我還認為它也將從根本上改變自助服務的工作方式，這就是為什麼我很高興我們不受座位數量的限制。因為——讓我們面對現實吧。人們正在實現和希望實現的巨大成本節約之一是減少他們難以找到的勞動力。所以我認為這將是一個非常完美的風暴。我確實認為我們確實擁有大量可以在前線交付的零件。所以，事情會很棒。

Looking forward to seeing what you'll be doing there. I guess the next one is just with respect to your partners as well. How are they approaching their strategies and recommendations at the moment related to just no code, low code and generative AI to their clients? Are they kind of also in a place where they're experimenting with or helping their clients experiment with new technology? And is there any sort of a headwind that this experimentation is doing to platform -- like low-code, no-code platform adoption?

期待看到您將在那裡做什麼。我想下一篇也是關於你的合作夥伴的。目前，他們如何向客戶提供與無代碼、低代碼和生成人工智能相關的策略和建議？他們是否也在嘗試或幫助客戶嘗試新技術？這個實驗對平台是否有任何不利影響——比如低代碼、無代碼平台的採用？

I think there is a lot of experimentation going on throughout the entire business system because, candidly, people are trying to figure out what's real and what's hype. The partner engagement I've had, though, has been extremely enthusiastic about what we're doing. I'm not sure that they're as enthusiastic about everybody, but I'm sure the partners will find a way to monetize it themselves, without a doubt.

我認為整個商業系統正在進行大量的實驗，因為坦率地說，人們試圖弄清楚什麼是真實的，什麼是炒作。不過，我的合作夥伴對我們正在做的事情非常熱情。我不確定他們對每個人都那麼熱情，但我確信合作夥伴會找到一種方法來自己賺錢，毫無疑問。

Our next question comes from Mark Schappel with Loop Capital Markets.

我們的下一個問題來自 Loop Capital Markets 的 Mark Schappel。

Alan, on Launchpad. You discussed the offering in more detail at the recent Investor Day. I was wondering if you could just bring us up to date on the status of your early adopter program for Launchpad. And maybe just talk a little bit about the -- some of the parts and capabilities of the offering that your partners are most excited about?

艾倫，在 Launchpad 上。您在最近的投資者日上更詳細地討論了此次發行。我想知道您是否可以向我們介紹您的 Launchpad 早期採用者計劃的最新狀態。也許只是談談您的合作夥伴最感興趣的產品的一些部分和功能？

So I'm thrilled actually with the feedback from our early adopters. The early adopter program is oversubscribed and the partners are showing enormous enthusiasm. Just so folks know, if you haven't plugged into Launchpad, Launchpad is a way of bringing the way we've historically thought about work-driven systems to partners who want to capture their own IP and offer their own IP to subscribers powered by Pega and it was built specifically for this. And I think it's really unique in the market in being able to do that, and that is the feedback we've gotten from the organizations that we've done the early work with.

因此，我對早期採用者的反饋感到非常興奮。早期採用者計劃已超額認購，合作夥伴表現出極大的熱情。大家都知道，如果您還沒有接入 Launchpad，Launchpad 是一種將我們歷來思考工作驅動系統的方式帶給那些想要獲取自己的 IP 並為訂閱者提供自己的 IP 的合作夥伴的一種方式。 Pega 是專門為此而構建的。我認為能夠做到這一點在市場上確實是獨一無二的，這就是我們從與我們進行早期合作的組織那裡得到的反饋。

So we've been reluctant to make any projections for this year because it is a nascent technology, but I'm expecting that I will be able to talk about Launchpad's contribution to the financial strength of the business next year, because I think it's going really well.

因此，我們一直不願意對今年做出任何預測，因為它是一項新興技術，但我希望明年我能夠談論 Launchpad 對業務財務實力的貢獻，因為我認為它會真的很好。

Our next question comes from Tom Blakey with KeyBanc Capital Markets.

我們的下一個問題來自 KeyBanc Capital Markets 的 Tom Blakey。

Great stuff here. I'm trying to balance out these 2 moving parts on the macro. It seems to have gotten incrementally a little more headwindy, and AI which you seem more bullish on, Alan. In terms of the $1.4 billion calendar '23 guide, it seems like maybe AI could be incremental here. But just trying to understand kind of where we are, like when the guidance was set and where we are now in terms of balancing these 2 points out. And I have a follow-up on free cash flow.

這裡有很棒的東西。我試圖在宏觀上平衡這兩個移動部分。艾倫，它似乎變得越來越逆風，而你似乎更看好人工智能。就 23 年 14 億美元的日曆指南而言，人工智能似乎可以在這裡增量。但只是想了解我們所處的位置，例如指導方針何時制定以及我們現在在平衡這兩點方面處於什麼位置。我對自由現金流進行了跟踪。

So let me take that one, on the revenue side. So Tom, I think it is -- this has happened to us in a few years where when there -- the Pega Cloud momentum creates a little bit of variability on the accounting revenue piece of it, all right? So if you look at where we started the year, the revenue number can move around because of that mix of Pega Cloud. I think, when you think about our ACV and our billings, which are kind of -- those are very integrally connected, I'd say that's kind of where the macro discussion comes in.

讓我來談談收入方面的問題。所以湯姆，我認為，這種情況在我們身上發生了幾年，當時，Pega Cloud 的勢頭在會計收入部分造成了一點變化，好嗎？因此，如果你看看我們今年開始的情況，就會發現收入數字可能會因為 Pega Cloud 的組合而發生變化。我認為，當你想到我們的 ACV 和我們的賬單時，它們是緊密相連的，我想說這就是宏觀討論的切入點。

I just want to separate revenue from ACV a little bit. So I think revenue is definitely a little bit more of a wildcard depending on the mix of the contracts. So that's an unfortunate reality for our business, but setting that up in terms of the ACV and the billings, I think maybe I'll leave you, Alan, to think about how you think about the macro now versus maybe when we started the year.

我只是想將收入與 ACV 分開一點。因此，我認為收入肯定是一個通配符，具體取決於合同的組合。所以這對我們的業務來說是一個不幸的現實，但是從ACV 和賬單的角度來看，我想也許我會讓你，艾倫，思考一下你現在對宏觀經濟的看法與我們年初時的情況相比。

Yes. Look. On a macro basis, the economic uncertainty and the fact that we have seen like some more approvals come into the mix is obviously a challenge and one we've seen before. But I will tell you, from a macro point of view, GenAI is a huge and not short-term factor here. And I think it's going to -- this is going to fundamentally change our business and a number of other businesses in a very, very big way over the next 12 to 24 months.

是的。看。從宏觀角度來看，經濟的不確定性以及我們看到更多批准加入的事實顯然是一個挑戰，而且我們以前也遇到過這樣的挑戰。但我會告訴你，從宏觀角度來看，GenAI 在這裡是一個巨大的而非短期的因素。我認為這將在未來 12 到 24 個月內從根本上極大地改變我們的業務和許多其他業務。

So I'm very, very bullish. I'd love to be able to put out a quarter where there wasn't some bit of mixed results, but we're working towards that. Cash flow was very positive. I will return to that. You had a question, is that about cash flow?

所以我非常非常看好。我希望能夠發布一個沒有混合結果的季度，但我們正在努力實現這一目標。現金流非常積極。我會回到這一點。你有一個問題，是關於現金流嗎？

Yes, I did. And before I get to that, Alan, just while I have you there on the huge comment on GenAI. There's been some of fellow vendors and big titans out there talking about monetization there. Do you want to offer up maybe some visibility very early on here that you see in terms of possible like-for-like uplift in terms of pricing or monetization per client given that 90% of ACV is going to come from existing clients?

是的，我做到了。在我開始之前，艾倫，就在我請你對 GenAI 發表大量評論的時候。有一些供應商同行和巨頭在談論貨幣化。鑑於 90% 的 ACV 將來自現有客戶，您是否想在這裡很早就提供一些可見性，您認為每個客戶的定價或貨幣化方面可能會出現類似的提升？

Yes. I think the biggest aspect of monetization is going to be because we're going to accelerate our clients' use of the technology, so that they're going to use it more. I think some of the vendors you're referring to are stuck with more of a seat model. They're going to have to figure out how to fix it. We don't have that problem. So we're really in a good place that, as customers get excited about this and want to use it, it's going to lead to greater volumes and that will lead directly to monetization.

是的。我認為貨幣化的最大方面是因為我們將加速客戶對技術的使用，以便他們更多地使用它。我認為你提到的一些供應商更多地停留在座椅模型上。他們必須弄清楚如何解決這個問題。我們沒有這個問題。因此，我們確實處於一個有利的位置，當客戶對此感到興奮並想要使用它時，它將帶來更大的銷量，並直接帶來貨幣化。

We will have some add-on things that are separately priced, but I don't expect that we're going to do something onerous to our clients, like, I think some customers are worried about from other vendors. I've heard some numbers brought forward on seat pricing that I think are going to be anxiety producing to their customer banks. We don't have to do that with our consumer base to trying to set their mind.

我們將有一些單獨定價的附加產品，但我不認為我們會對客戶做一些繁重的事情，比如，我認為一些客戶擔心其他供應商的問題。我聽說一些有關座位定價的數字，我認為這些數字將會給他們的客戶銀行帶來焦慮。我們不必對我們的消費者群體這樣做，試圖讓他們下定決心。

Yes. I guess you know what I was referring to, Alan. That's very clear. And on the impressive free cash flow here, I'm just wondering, your converts are still trading, I think, at a 8% or 9% discount here, Ken. Not calling out anything specifically, but I'd like to know what your updated thinking is there. I know things are probably a little bit more, for the lack of a better word, happy for you here, Ken.

是的。我想你知道我指的是什麼，艾倫。這非常清楚。關於這裡令人印象深刻的自由現金流，我只是想知道，我認為你的皈依者仍在以 8% 或 9% 的折扣進行交易，肯。沒有具體指出任何內容，但我想知道您的最新想法是什麼。我知道事情可能有點多，因為缺乏更好的詞，我為你感到高興，肯。

So -- but just an update on capital structure, capital return and also how it kind of like maybe possibly impacts that Rule of 40 as you move things around here with a much -- potentially better balance sheet going forward? That would be helpful.

那麼，只是關於資本結構、資本回報的更新，以及當你以一個可能更好的資產負債表向前推進時，它可能如何影響 40 規則？那會有幫助的。

Well, I think that we were never aggressively in the market to buy back the converts. We were -- those were opportunistic where some investors were looking to get out of their positions and we felt like there was an interesting IRR to do so. And actually if the stock's price goes up and as we get closer to maturity, that becomes less arbitrage, so to speak, on that versus what we can get at overnight rate.

嗯，我認為我們從來沒有在市場上積極回購皈依者。我們是——那些是機會主義的，一些投資者希望擺脫他們的頭寸，我們覺得這樣做有一個有趣的內部收益率。實際上，如果股票價格上漲，並且隨著我們接近到期日，套利就會減少，可以說，相對於我們可以通過隔夜利率獲得的套利。

So I would say we're still -- we'll consider opportunities when they come in, but we're not aggressively going out nor did we on the other transactions. I think it's more just a sign that we have a lot of confidence in the durability of the business and the cash flow of the business and we felt like we're very comfortable taking that $100 million out of the convert.

所以我想說，我們仍然會在機會出現時考慮機會，但我們不會積極走出去，也不會進行其他交易。我認為這更多地表明我們對業務的持久性和業務的現金流充滿信心，並且我們覺得我們非常樂意從轉換中取出這 1 億美元。

And then just from -- and from a longer-term perspective, so just letting -- from a strategic perspective then, just letting the cash build?

然後只是從 - 從更長遠的角度來看，所以只是讓 - 從戰略角度來看，只是讓現金積累？

Yes. I mean we have -- naturally, from a capital allocation standpoint, we have a near-term event if we wanted to have, which is to basically not -- to basically take out the converts and not to re-up them or to refinance them. So naturally that's something that's out there that we want as much flexibility as we can with our options.

是的。我的意思是，從資本配置的角度來看，我們自然會遇到一個近期事件，如果我們想要的話，基本上不會——基本上剔除轉換者，而不是重新增加他們或再融資他們。因此，很自然地，我們希望我們的選擇具有盡可能多的靈活性。

We're at time, but I see there are a couple of more people in the queue. We'll very quickly take 2 more questions.

我們到了時間，但我看到還有幾個人在排隊。我們很快就會回答另外 2 個問題。

Our next question comes from Patrick Walravens with Citizens, JMP.

我們的下一個問題來自 JMP Citizens 的 Patrick Walravens。

Great. So Alan, my question is do you have enough sort of PhD-level AI talent to do what you want to do. I mean you have Peter van der Putten and then you added Christian, right, but how much you need...

偉大的。所以艾倫，我的問題是你是否有足夠的博士級人工智能人才來做你想做的事情。我的意思是你有彼得·范德普滕，然後你添加了克里斯蒂安，對吧，但是你需要多少......

I have Rob Walker too, who is a pretty good PhD and has been with us on the main stage at PegaWorld. And I -- and we have a couple of others who aren't PhDs but easily could have been who are sprinkled in. So yes, I feel really good about our talent base in this environment.

我還有 Rob Walker，他是一位非常優秀的博士，一直和我們一起登上 PegaWorld 的主舞台。我——還有其他幾個人不是博士學位，但也很可能是散佈其中的人。所以，是的，我對我們在這種環境下的人才基礎感到非常滿意。

And then can I ask -- can we get an update on the lawsuit? There's probably not a lot you can say, but whatever you can say?

然後我可以問一下——我們能得到訴訟的最新消息嗎？也許你能說的不多，但你能說什麼呢？

We're in the appeal-waiting process, and I am looking forward to getting that in front of the judges. I'll just say that.

我們正處於上訴等待過程中，我期待著將其提交給法官。我就這麼說吧。

And I think we are at time. So we will have to call it. Let me just tell everyone, thank you very much. We're working hard for you. We're actually generating cash, which I know Ken and I are very excited about. And we will continue to keep you all updated. Take care, everyone. Bye-bye.

我認為我們正逢其時。所以我們必須調用它。我就跟大家說一下吧，非常感謝。我們正在為您努力。我們實際上正在創造現金，我知道肯和我對此感到非常興奮。我們將繼續向大家通報最新情況。大家保重。再見。

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與。