Pegasystems Inc (PEGA) 2023 Q3 法說會逐字稿

Greetings, and welcome to the Pegasystems Third Quarter 2023 Earnings Results Conference Call.

您好，歡迎參加 Pegasystems 2023 年第三季財報電話會議。

(Operator Instructions)

（操作員說明）

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Peter Welburn, Vice President, Corporate Development and IR for Pega Systems. Please go ahead.

提醒一下，本次會議正在錄製中。現在我很高興向您介紹主持人，Pega Systems 企業發展和 IR 副總裁 Peter Welburn。請繼續。

Thank you, Priscilla, and good morning, everyone, and welcome to Pegasystems Q3 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. Because such statements deal with future events, they are subject to various risks and uncertainties, actual results for fiscal 2023 and beyond could differ materially from the company's current expectations. Our press release announcing our Q3 2023 earnings and our SEC filings, including our most recent annual report, describe factors that could impact our results and cause them to materially differ from those expressed in forward-looking statements.

謝謝 Priscilla，大家早安，歡迎參加 Pegasystems 2023 年第三季財報電話會議。在我們開始之前，我想閱讀我們的安全港聲明。本簡報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、預測和指導或此類詞語和其他類似表述的變體確定前瞻性陳述，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。由於此類聲明涉及未來事件，因此會受到各種風險和不確定性的影響，2023 財年及以後的實際結果可能與公司目前的預期有重大差異。我們宣布 2023 年第三季收益的新聞稿和向 SEC 提交的文件（包括我們最近的年度報告）描述了可能影響我們的結果並導致其與前瞻性聲明中表達的結果存在重大差異的因素。

Investors should not place undue reliance on forward-looking statements, matters contained forward-looking statements may not occur. Later events, new information or other factors may cause our views to change, but we will not publicly update or revise forward-looking statements unless required by law to do so.

投資人不應過度依賴前瞻性陳述，前瞻性陳述所包含的事項可能不會發生。後來的事件、新資訊或其他因素可能會導致我們的觀點發生變化，但我們不會公開更新或修改前瞻性陳述，除非法律要求這樣做。

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 創辦人兼執行長 Alan Trefler。

Thank you, Peter, and to everyone who's joined today's call. It's great to see us improve performance in an uncertain macroeconomic environment. Now more than ever, we are focused on running a business that balances growth and free cash flow. And it's especially good to see record cash flow as we come out of our subscription transition, and we're just getting started. Ken will go into more detail on our financial results in a moment.

謝謝彼得，也感謝所有參加今天電話會議的人。很高興看到我們在不確定的宏觀經濟環境中提高績效。現在，我們比以往任何時候都更專注於平衡成長和自由現金流的業務運作。當我們完成訂閱過渡時，看到創紀錄的現金流尤其令人高興，而我們才剛剛開始。肯稍後將詳細介紹我們的財務業績。

As I mentioned last quarter, we've been finding additional ways to engage effectively and efficiently with our clients. The transformation of our go-to-market model is delivering on our goal of deepening client relationships. This helps drive more meaningful engagement across multiple teams as those relationships strengthen. And I was excited to spend most of Q3 on the road, meeting with clients, prospects and partners globally. Coming off the tremendous momentum from PegaWorld and the launch of Infinity '23, it was terrific to spend this direct time with these constituencies. And we recently had around the world trip, and it was good to see folks I have not had a chance to see at PegaWorld.

正如我上季度提到的，我們一直在尋找其他方法來有效且有效率地與客戶互動。我們進入市場模式的轉變正在實現我們深化客戶關係的目標。隨著這些關係的加強，這有助於推動多個團隊之間更有意義的參與。我很高興第三季的大部分時間都在路上，與全球的客戶、潛在客戶和合作夥伴會面。在 PegaWorld 和 Infinity '23 的推出帶來的巨大動力之後，能夠與這些支持者直接共度這段時間真是太棒了。我們最近進行了環球旅行，很高興見到我在 PegaWorld 沒有機會見到的人們。

I met face-to-face with over 100 clients and partners and had terrific conversations across the board, across the U.S. with Amazon, Bank of America, UnitedHealth Group, and even to India with Verizon where they, like many of our clients, are establishing global competency centers, and we're having a chance to engage our Indian team directly with them. Going down to APAC with ANZ Bank, National Australia Bank, multiple government agencies across APJ, and in London with HSBC, Lloyds and Vodafone. As well as with the thousands of our partners around the world, including Accenture, Capgemini, Cognizant, EY and Infosys.

我與100 多名客戶和合作夥伴進行了面對面的交流，並進行了精彩的全面對話，在美國各地與亞馬遜、美國銀行、聯合健康集團，甚至在印度與Verizon 進行了交談，他們和我們的許多客戶一樣，在印度與Verizon 進行了交談。建立全球能力中心，我們有機會與我們的印度團隊直接接觸。與澳新銀行、澳洲國民銀行、亞太及日本地區多個政府機構一起前往亞太地區，並與匯豐銀行、勞埃德銀行和沃達豐一起前往倫敦。以及我們在世界各地的數千家合作夥伴，包括埃森哲、凱捷、高知特、安永和印孚瑟斯。

So what I'll tell you also is our U.S. briefing center, continues to be extremely busy this year. We've had hundreds of meetings with clients like ING, Mondelez, Navy Federal Union and Scotiabank with their staff have really come in to deal with deep dive on topics ranging from Pega Strategy to Pega Cloud. We have many more plans for Q4.

所以我還要告訴你的是，我們的美國簡報中心今年仍然非常忙碌。我們與 ING、Mondelez、Navy Federal Union 和 Scotiabank 等客戶進行了數百次會議，他們的員工確實參與了深入探討從 Pega 策略到 Pega 雲端等主題的討論。我們第四季還有更多計劃。

And in Q3, we kicked off a series of account-based marketing client events, to continue the momentum of PegaWorld with 75 regional and clients specifically as planned, and we're going to have even more before the end of the year. I'm really enjoying being back on the road in a significant way. And I'm terrifically excited about the level of engagement and dialogue we're having. And even though you can accomplish a lot remotely, meeting in-person provides a different type of opportunity to dig in and understand what's top of mind for our clients.

在第三季度，我們啟動了一系列基於帳戶的行銷客戶活動，以延續 PegaWorld 的勢頭，按計劃與 75 個區域和客戶合作，我們將在年底之前舉辦更多活動。我真的很高興能以一種重要的方式回到路上。我對我們的參與和對話水平感到非常興奮。儘管您可以遠端完成很多工作，但面對面的會議提供了不同類型的機會來深入了解並了解我們客戶的首要想法。

Now, as I've done this, I have had a chance to really hear firsthand what the client interest and questions are about what Pega can do and does Pega have a unique advantage in this product environment. And what I'll tell you is that AI, no surprise, has become central to nearly every client conversation. And their questions are following into a few categories. First, what should their AI strategy be? And where does Pega fit? Second, how can they protect and govern their proprietary customer data? And third, how can they address the risks associated with GenAI, (inaudible) hallucinations where the AI provides a response not backed up by data or best process. And this -- these places are where Pega technology experience gives us a unique competitive advantage in my view.

現在，當我這樣做時，我有機會真正聽到客戶對 Pega 可以做什麼以及 Pega 在這個產品環境中是否具有獨特優勢的興趣和疑問。我要告訴你的是，毫不奇怪，人工智慧已經成為幾乎所有客戶對話的核心。他們的問題分為幾類。首先，他們的人工智慧策略應該是什麼？ Pega 適合哪裡？其次，他們如何保護和管理其專有的客戶資料？第三，他們如何解決與 GenAI 相關的風險，即人工智慧提供的回應沒有數據或最佳流程支援的（聽不清楚）幻覺。在我看來，這些地方都是 Pega 技術經驗為我們提供獨特競爭優勢的地方。

Let me elaborate. First, in terms of strategy. We have decades of hands-on experience helping clients leverage AI, and we can use it to help them with their strategy. We have terrific insights into the most successful early use cases for GenAI, and those we believe will deliver the highest return on investment. And we're showing them to our clients and getting tremendous, tremendous positive feedback.

讓我詳細說明一下。首先，在戰略上。我們擁有數十年幫助客戶利用人工智慧的實務經驗，我們可以利用它來幫助他們制定策略。我們對 GenAI 最成功的早期用例有著深刻的見解，並且我們相信這些用例將帶來最高的投資回報。我們向客戶展示它們並獲得了巨大的正面回饋。

One of the best things that actually any of you to try is this interactive demo on pega.com that shows how we have linked generative AI into the core thinking of how Pega workflow should work, and how it's going to help you create all the necessary elements using the knowledge of the Internet to be able to bring best practices into a business. You'll see within seconds, the workflows, the users, the data model and the other key elements identified. We launched it when Pega Infinity went live in mid-September. And in the first month, thousands of people from around the world accessed the demo and did over 6,000 workflow generations, from employee onboarding to a cricket score board generator.

實際上，你們中任何人都可以嘗試的最好的事情之一就是pega.com 上的這個互動式演示，它展示了我們如何將生成式AI 與Pega 工作流程應如何工作的核心思想聯繫起來，以及它將如何幫助您創建所有必要的內容利用互聯網知識將最佳實踐引入企業的元素。您將在幾秒鐘內看到工作流程、使用者、資料模型和其他已識別的關鍵元素。我們在 9 月中旬 Pega Infinity 上線時推出了它。在第一個月內，來自世界各地的數千人訪問了該演示，並產生了 6,000 多個工作流程，從員工入職到板球記分板產生器。

Now I would suggest that anybody interested in understanding how this can be done really practically, I would go find it try it free. It's on pega.com, just go to the site, either take the interactive tour that we have or just search for GenAI and check out the interactive demo, which is what I've just been talking about. Try building an app for your current firm or a business that you've been thinking about starting when you retire. And I think you'll be -- you'll share the excitement of how Pega is in a position to really bring this technology home in a very unique way. We had a lot of fun, and a lot of clients have gotten very jazz and interested in this. You can even try it on your mobile phone, and you can be building these sorts of things right from your mobile phone, and it's also quite a good demo there.

現在我建議任何有興趣了解如何在實際中實現這一點的人，我會去找它免費嘗試。它位於 pega.com 上，只需訪問該網站，要么參加我們提供的互動式導覽，要么搜尋 GenAI 並查看互動式演示，這就是我剛才所說的。嘗試為您目前的公司或您退休後一直考慮開始的業務建立一個應用程式。我想您將會——您將會分享 Pega 如何以非常獨特的方式真正將這項技術帶回家的興奮之情。我們玩得很開心，很多客戶都變得非常爵士樂並對這個感興趣。你甚至可以在你的手機上嘗試它，你可以直接從你的手機上建立這些東西，這也是一個很好的演示。

So when customers see what we're able to do, see what we're shipping in Infinity '23, we get a very positive reaction in terms of how we can add powerful and pragmatic capabilities to their businesses. Now in terms of where Pega fits into their strategy, you need to remember that while most companies continue to think about GenAI as a cogenerator, Pega is core is based on the concept of a business model that brings a structure and system that could evolve as the client needs and the industry needs and the customer needs to evolve.

因此，當客戶看到我們能夠做的事情，看到我們在 Infinity '23 中提供的產品時，我們在如何為他們的業務添加強大而務實的功能方面得到了非常積極的反應。現在就Pega 融入其策略的位置而言，您需要記住，雖然大多數公司繼續將GenAI 視為熱電聯產設備，但Pega 的核心是基於商業模式的概念，該模式帶來了可以隨著發展而發展的結構和系統。客戶需求、產業需求以及客戶需求不斷發展。

Instead of code with our GenAI, we generate business launching into a model that organizes the business objectives and lets the AI be understood, let it be reviewed, adjusted, curated and approved. And the center of this is what you've heard me refer to as our unique situation layer cake. This is something that organizes the way a business runs into layers, with some elements operating across the business as a whole, some on the division, some perhaps in the department and some for different customer segments or different regions and geographies.

我們不是使用 GenAI 進行編碼，而是將業務啟動到一個模型中，該模型組織業務目標並讓 AI 被理解，讓它被審查、調整、策劃和批准。這的中心就是你聽到我所說的我們獨特的情況夾心蛋糕。這是將業務運作方式組織為多個層次的東西，其中一些元素在整個業務中運行，一些元素在部門中運行，一些可能在部門中運行，一些元素針對不同的客戶群或不同的地區和地區。

This unique structure organizes all the enterprise assets, the processes, the rules, the data models and UI into these layers, which are designed for BUs. There are the perfect architecture for using GenAI with. And it's what gives Pega a unique, and I believe standing advantage because you'll plug GenAI in when the rules and workflows are defined and there'll be able to complement what already exists, they'll be able to let you change pieces of your business or workflow at a time, and they provide, I think, a power that's very, very different than a lot of the hype that's out there, because users are looking at our model versus looking at code.

這個獨特的結構將所有企業資產、流程、規則、資料模型和 UI 組織到這些專為 BU 設計的層中。有使用 GenAI 的完美架構。這就是 Pega 獨特的原因，我相信它具有長期優勢，因為當規則和工作流程定義好後，您將插入 GenAI，並且能夠補充現有的內容，它們將能夠讓您更改某些部分我認為，它們提供的力量與外界的許多炒作非常非常不同，因為用戶正在查看我們的模型而不是程式碼。

They can actually collaborate it, the business users of transparency working with IT. It provides that vehicle for governance when changes are introduced and makes them all manageable. So in short, it takes the output from the AI and organizes it in a way that really helps businesses build for change. And it's proprietary to Pega. I don't think it can be readily copied or reproduced, and we don't see anybody else taking this approach. We really feel good about what this means for us.

他們實際上可以進行協作，業務用戶可以透明地與 IT 合作。它在引入變更時提供了治理工具，並使它們全部易於管理。簡而言之，它獲取人工智慧的輸出，並以真正幫助企業實現變革的方式對其進行組織。它是 Pega 專有的。我認為它不容易被複製或複製，而且我們沒有看到其他人採取這種方法。我們真的很高興這對我們意味著什麼。

So we've also created about 20 GenAI boosters with Pega Infinity that makes the GenAI practical, that makes it all real. And you can also see those described at pega.com.

因此，我們也使用 Pega Infinity 創建了大約 20 個 GenAI 增強器，使 GenAI 變得實用，讓一切變得真實。您也可以在 pega.com 上查看這些描述。

Now secondly, relative to data, we will be able to help clients protect and govern customer data through the powerful capabilities in our software. Pega's audit trail capabilities, which have been described as the best in the industry, are robust and comprehensive. And third, we addressed GenAI risks by leveraging a platform which is designed to help customers deploy all of their processes and their AI effectively and responsibly.

其次，相對於數據，我們將能夠透過我們軟體中的強大功能來幫助客戶保護和管理客戶數據。 Pega 的審計追蹤功能被認為是業內最好的，強大而全面。第三，我們透過利用一個平台來解決 GenAI 風險，該平台旨在幫助客戶有效、負責任地部署所有流程和人工智慧。

(inaudible) can see what's happening and help identify where AI is working in their models, and help them understand when the AI is doing something that makes sense and when it's generating nonsense. Our robot capabilities also help clients confirm that the data that powers AI decisioning is unbiased and comprehensive using our unique ethical bias check, which helps identify and eliminate biases hidden in the AI, are flagging possible discriminatory offers and messages generated by AI before they reach the customer. This unique capability helps clients pinpoint any offending elements and adjust the algorithms to ensure fair outcomes.

（聽不清楚）可以看到正在發生的事情，並幫助識別人工智慧在其模型中的工作位置，並幫助他們了解人工智慧何時在做有意義的事情以及何時在產生無意義的事情。我們的機器人功能還可以幫助客戶使用我們獨特的道德偏見檢查來確認支援人工智慧決策的數據是公正且全面的，這有助於識別和消除隱藏在人工智慧中的偏見，並在人工智慧生成的可能的歧視性報價和訊息到達目的地之前對其進行標記。顧客。這種獨特的功能可以幫助客戶找出任何違規元素並調整演算法以確保公平的結果。

Now the client response we're having to this is very, very exciting and inspiring. And it's wonderful to see our clients now beginning to work on this and taking it very, very much apart. I think as we move into 2024, we're going to complement what we've already released here in '23 with a great new pipeline of features that are going to very, very aggressively continue to extend the power of these game-changing capabilities but also leveraging our unique architecture.

現在，客戶對此的反應非常非常令人興奮和鼓舞。很高興看到我們的客戶現在開始致力於此工作並將其徹底分開。我認為，當我們進入 2024 年時，我們將通過一系列出色的新功能來補充我們在 23 年已經發布的功能，這些功能將非常非常積極地繼續擴展這些改變遊戲規則的功能的力量還利用我們獨特的架構。

Before I wrap up, I also want to provide a quick update on Pega Launchpad, our new cloud-based low-code application development platform for building business-to-business SaaS applications that we announced last year. It's a gorgeous piece of software, and the team has done a tremendous job in staying focused and supporting our early adopters, and we now have our first handful of Launchpad clients. We're really excited to ramp this business up in 2024 and beyond.

在結束之前，我還想快速介紹一下 Pega Launchpad，這是我們去年宣布的新的基於雲端的低程式碼應用程式開發平台，用於建立企業對企業 SaaS 應用程式。這是一款非常棒的軟體，團隊在保持專注和支持我們的早期採用者方面做了巨大的工作，現在我們擁有了第一批 Launchpad 客戶。我們非常高興能夠在 2024 年及以後擴大這項業務。

So in summary, we continue to improve our performance. And as we come out as a subscription transition, we see the cash improving despite the uncertain macro environment. The transformation of our go-to-market model is improving our sales efficiency and our engagement, focusing on really deepening the critical relationships that drive our business. And our unique technology architecture is a competitive advantage that lends itself to really leverage GenAI in a way that I don't see our competitors easily replicating it, is going to be a big and long-lasting distinction.

總而言之，我們不斷提高我們的績效。當我們進行認購過渡時，儘管宏觀環境不確定，但我們看到現金狀況有所改善。我們進入市場模式的轉變正在提高我們的銷售效率和參與度，重點是真正深化推動我們業務發展的關鍵關係。我們獨特的技術架構是一種競爭優勢，它有助於真正利用 GenAI，而我認為我們的競爭對手無法輕易複製它，這將是一個巨大而持久的區別。

So we continue to make good progress. We continue to make good progress in becoming a Rule of 40 company, balancing growth with fiscal discipline and to provide more color on the financial results. Let me now turn it over to our COO and CFO, Ken Stillwell. Ken?

所以我們繼續取得良好進展。我們在成為 40 條規則公司、平衡成長與財務紀律以及為財務表現提供更多色彩方面繼續取得良好進展。現在讓我將其交給我們的營運長兼財務長 Ken Stillwell。肯？

Thanks, Alan. Through the first 3 quarters of 2023, we've made meaningful progress improving our cash flow while maintaining double-digit ACV growth. We're managing the company with a Rule of 40 mindset, the principal in a well-run firm's growth rate and free cash flow margin should meet or exceed 40%. I've got some exciting news to share later on the call regarding our free cash flow.

謝謝，艾倫。 2023 年前 3 季度，我們在改善現金流方面取得了有意義的進展，同時保持了兩位數的 ACV 成長。我們以40法則的心態來管理公司，經營良好的公司主要成長率和自由現金流利潤率應該達到或超過40%。我稍後在電話會議上要分享一些關於我們自由現金流的令人興奮的消息。

Now I'm going to start this morning with the most important metric to measure the success of our business. Growth in annual contract value, or ACV. This year, we've experienced a macroeconomic environment that's not noticeably worse than last year, but it's certainly not much better. Our clients are still buying, but they're scrutinizing things more closely. Sales cycles are a little longer than they've been for the last few years. Despite that, our sales team delivered a good Q3 with significant contributions from EMEA and from our financial services clients.

現在我將從今天早上開始討論衡量我們業務成功與否的最重要指標。年度合約價值（ACV）的成長。今年，我們經歷的宏觀經濟環境與去年相比並沒有明顯惡化，但也肯定好不了多少。我們的客戶仍在購買，但他們正在更仔細地審視事物。銷售週期比過去幾年要長一些。儘管如此，在歐洲、中東和非洲地區以及我們的金融服務客戶的巨大貢獻下，我們的銷售團隊在第三季取得了良好的表現。

Through the first 3 quarters of 2023, total contract value, TCV, bookings increased by about 20% year-over-year. And I think that's just an important measure to complement our ACV and backlog performance. Given the strong level of activity we experienced in Q3, our new go-to-market strategy is clearly leading to deeper engagement with our clients. As a result, ACV grew 12% year-over-year with currency helping our growth by around 2%.

截至 2023 年前 3 季度，合約總價值、TCV、預訂量年增約 20%。我認為這只是補充我們的 ACV 和積壓績效的重要措施。鑑於我們在第三季經歷的強勁活動，我們新的上市策略顯然會導致與客戶的更深入接觸。因此，ACV 年成長 12%，貨幣幫助我們成長了約 2%。

We like numerous other companies received an SEC comment letter related to standardizing our free cash flow measures. As you know, the more traditional way to calculate free cash flow is to take cash flow from operations and subtract capital expenditures. So going forward, this is the approach we will use. Going forward, we're not adding back onetime cash items such as restructuring charges to calculate and adjust free cash flow. However, we will continue disclosing in our earnings release cash items that we believe are not representative of our ongoing operating performance.

與許多其他公司一樣，我們也收到了美國證券交易委員會關於標準化我們的自由現金流指標的評論信。如您所知，計算自由現金流的更傳統方法是從營運中獲取現金流並減去資本支出。因此，展望未來，這就是我們將使用的方法。展望未來，我們不會再增加一次性現金項目（例如重組費用）來計算和調整自由現金流。然而，我們將繼續在收益報告中揭露我們認為不能代表我們持續經營績效的現金項目。

As we enter 2024, we do not anticipate onetime cash items being a big part or a big item of interest for investors. Over the first 3 quarters of 2023, Pega generated $138 million of cash flow from operations and $124 million of free cash flow. In Q3 alone, we added $24 million of free cash flow. The $124 million is the highest amount of free cash flow dollars generated in the first 3 quarters of the year in the history of the company. We increased our cash and marketable securities by $60 million year-to-date, and that's given our almost $100 million of convert repurchase.

進入 2024 年，我們預計曾經的現金項目不會成為投資者的重要組成部分或大的興趣項目。 2023 年前 3 季度，Pega 產生了 1.38 億美元的營運現金流和 1.24 億美元的自由現金流。光是第三季度，我們就增加了 2,400 萬美元的自由現金流。 1.24億美元是該公司歷史上今年前三個季度產生的最高自由現金流量。今年迄今為止，我們的現金和有價證券增加了 6,000 萬美元，這是考慮到我們近 1 億美元的可轉換回購。

As we outlined during the most recent investor session at PegaWorld in June, our multiyear plan to improve our free cash flow features 3 key levers. First, we need to expand total gross margin. We're confident we can continue to expand total gross margin by scaling our Pega Cloud business, increasing cloud automation, implementing Kubernetes and multi-tenancy. And our most recent results confirm that we're making progress. In Q3, on a trailing 12-month basis, non-GAAP total gross margin increased to just over 74%, a 129 basis point improvement year-over-year. Our key driver of our gross margin improvement is non-GAAP Pega Cloud gross margin, which increased 430 basis points from 69% to just under 73% on a trailing 12-month basis.

正如我們在 6 月 PegaWorld 最近一次投資者會議上概述的那樣，我們改善自由現金流的多年計劃具有 3 個關鍵槓桿。首先，我們需要擴大總毛利率。我們有信心透過擴展 Pega Cloud 業務、提高雲端自動化、實施 Kubernetes 和多租戶來繼續擴大總毛利率。我們最新的結果證實我們正在取得進展。第三季度，以過去 12 個月計算，非 GAAP 總毛利率增加至略高於 74%，較去年同期增加 129 個基點。毛利率改善的關鍵驅動因素是非 GAAP Pega Cloud 毛利率，在過去 12 個月的基礎上，該毛利率從 69% 增長了 430 個基點至略低於 73%。

Another lever to improve our free cash flow is to improve sales efficiency, which we view as the most important of the 3 levers. As you know, we made the difficult decision to reduce our headcount in the last year with the majority of those reductions coming from the sales and marketing organization. It's difficult to deliver double-digit growth while at the same time improving sales efficiency. We spend more than $0.5 billion annually on sales and marketing. That's a pretty big number, and we need to make sure that we're leveraging that to drive our growth. The last lever is really just to as we improve our free cash flow is to enhance our operating leverage by growing total other costs like general administrative and R&D to make sure that those spend at a slower pace than our ACV growth. At a company our size, we should definitely be able to exhibit operating leverage as we scale.

改善自由現金流的另一個槓桿是提高銷售效率，我們認為這是三個槓桿中最重要的一個。如您所知，我們去年做出了減少員工人數的艱難決定，其中大部分裁員來自銷售和行銷組織。在提高銷售效率的同時實現兩位數的成長是很困難的。我們每年在銷售和行銷上的支出超過 5 億美元。這是一個相當大的數字，我們需要確保利用它來推動我們的成長。當我們改善自由現金流時，最後一個槓桿實際上是透過增加一般管理和研發等其他總成本來提高我們的營運槓桿，以確保這些支出的速度慢於我們的 ACV 成長。對於我們這樣規模的公司來說，我們絕對應該能夠隨著規模的擴大而發揮營運槓桿作用。

Over the last year, we've taken action to simplify our go-to-market motion. For software companies like ours, the enemy of sales efficiency and effectiveness is often complexity. So we've eliminated layers of management, further clarify team roles, focused our sales team on cross-selling and up-selling into our existing clients, making sure that all of our teams are aligned. Taking together these actions are helping to improve our sales efficiency. And you can see the results in our financials. On a non-GAAP basis, total sales and marketing spend as a percentage of revenue declined from 47% and to 38% year-over-year in Q3 on a trailing 12-month basis.

去年，我們採取了行動來簡化我們的上市行動。對於像我們這樣的軟體公司來說，銷售效率和效果的敵人往往是複雜性。因此，我們消除了管理層，進一步明確了團隊角色，將銷售團隊的重點放在對現有客戶的交叉銷售和追加銷售上，確保我們所有的團隊保持一致。將這些行動結合起來有助於提高我們的銷售效率。您可以在我們的財務數據中看到結果。以非公認會計準則計算，過去 12 個月的銷售和行銷總支出佔收入的百分比從第三季的 47% 年減至 38%。

Our focused execution on balancing growth and profit is positively impacting our profitability, generating $124 million of free cash flow, as I mentioned, in the first 3 quarters of 2023, and it shows progress across all of our levers. The big change from the negative free cash flow of $36 million generated in the first 3 quarters of 2022. I've also got some good news to share regarding our free cash flow trajectory as we go forward. Based on where we are year-to-date that our global team's successful execution on our plan, I'm confident that we've got a shot to deliver more than $200 million of free cash flow in 2023. I'm excited that our team is in a position to deliver the highest annual cash flow in the history of the company, and Q4 is typically our strongest cash flow generation quarter of the year. To be clear, we do not update guidance quarterly, and I'm not creating any type of precedent or officially updating free cash flow guidance for 2023. I'm just sharing my current thoughts on our free cash flow trajectory as we approach the completion of 2023.

正如我所提到的，我們對平衡成長和利潤的專注執行對我們的獲利能力產生了積極影響，在2023 年前3 季度產生了1.24 億美元的自由現金流，這表明我們所有槓桿都取得了進展。與 2022 年前 3 季產生的 3,600 萬美元負自由現金流相比，這是一個巨大的變化。我還有一些關於我們未來自由現金流軌蹟的好消息要分享。根據今年迄今為止我們的全球團隊成功執行計劃的情況，我相信我們有機會在 2023 年實現超過 2 億美元的自由現金流。我很高興我們的團隊有能力提供公司歷史上最高的年度現金流，而第四季通常是我們一年中現金流產生最強的季度。需要明確的是，我們不會每季更新指導，我也不會創造任何類型的先例或正式更新 2023 年自由現金流指導。我只是在接近完成時分享我目前對自由現金流軌蹟的想法2023 年。

In prior calls, we have shared some thoughts on modeling our business, and we've received feedback this practice is helpful. So I've decided to reinforce those again today. First, let me start with free cash flow. I know that making a change in how we present free cash flow might be considered somewhat unusual. So we've added a table in our earnings release to show the free cash flow quarterly, just to help with your modeling. The table also separately discloses items that affect our cash flow and are considered by management, not to be representative of the core business operations, such as restructuring costs.

在先前的電話會議中，我們分享了一些關於業務建模的想法，並且我們收到了這種做法很有幫助的回饋。所以我決定今天再加強這些。首先，讓我從自由現金流開始。我知道改變我們呈現自由現金流的方式可能會被認為有些不尋常。因此，我們在收益發布中添加了一個表格來顯示季度自由現金流，只是為了幫助您進行建模。該表還單獨披露了影響我們現金流且管理層認為不代表核心業務運營的項目，例如重組成本。

Second, our prior 2023 annual free cash flow guidance included these adjustments. So going forward, our free cash flow guidance will be consistent with a more conventional methodology.

其次，我們先前 2023 年的自由現金流指引包括了這些調整。因此，展望未來，我們的自由現金流指引將與更傳統的方法保持一致。

Lastly, we did close more term license deals in the quarter than is typical. Our term license bookings are strongest in the first and the final quarters of the year. So a strong term license booking result in Q3 is not typical. However, we view the growth in ACV as the most critical measure. And our clients sometimes decide to use client cloud versus Pega Cloud, and we will support them when they make that decision.

最後，我們在本季完成的定期許可交易比通常情況要多。我們的定期許可證預訂量在今年第一季和最後一個季度最為強勁。因此，第三季的強勁期限許可證預訂結果並不典型。然而，我們認為 ACV 的成長是最關鍵的衡量標準。我們的客戶有時決定使用客戶端雲端而不是 Pega Cloud，當他們做出決定時，我們將為他們提供支援。

This year, we continue to make progress on our journey to improve our cash flow, while at the same time maintaining a double-digit ACV growth rate in what continues to be a more uncertain selling environment. Our team is clearly embracing a Rule of 40 mindset and doing a much better job of managing the trade-offs between growth and profit. The world's greatest software companies do not only achieve the Rule of 40 in a single year, but they do it consistently and over sustained periods of time. That's our objective. To be the kind of company that balances growth and profit over the long term. And we look forward to closing out 2023 in the next few months.

今年，我們在改善現金流方面繼續取得進展，同時在仍然更不確定的銷售環境中保持兩位數的 ACV 成長率。我們的團隊顯然採用了「40 法則」思維模式，並且在管理成長和利潤之間的權衡方面做得更好。世界上最偉大的軟體公司不僅在一年內實現了 40 法則，而且在持續的一段時間內始終如一地做到這一點。這就是我們的目標。成為那種長期平衡成長和利潤的公司。我們期待著 2023 年在接下來的幾個月內結束。

As I wrap up today, I wanted to announce that our annual investor session will be held on Monday, June 10, the MGM Hotel in Las Vegas, during PegaWorld. Please mark your calendars. I look forward to seeing you all on the road as we get out to meet current and potential investors in November and December.

在我今天結束演講時，我想宣布，我們的年度投資者會議將於 6 月 10 日星期一在拉斯維加斯米高梅酒店的 PegaWorld 期間舉行。請標記您的日曆。我期待在 11 月和 12 月與現有和潛在投資者會面時見到大家。

One last point. The date for our oral argument in our Virginia appeal is now scheduled for November 15. Although it will likely be months before we know the result, it's still great to have the appeal now scheduled and in front of us.

最後一點。我們在維吉尼亞州上訴中的口頭辯論日期現已定於 11 月 15 日。儘管我們可能需要幾個月的時間才能知道結果，但現在上訴已安排在我們面前仍然很棒。

With that, operator, please open the call for questions.

那麼，接線員，請打開提問電話。

(Operator Instructions)

（操作員說明）

And our first question comes from Steve Enders with Citi.

我們的第一個問題來自花旗銀行的史蒂夫恩德斯。

Maybe to start, I just want to get a better understanding for -- when you talk about uncertain macro and that kind of continuing, what that actually looks like in terms of the deal environment that you're seeing out there? And maybe how are things maybe changed so far in October from the conversations and the deal environment that you're seeing today?

也許首先，我只是想更好地理解——當你談論不確定的宏觀經濟和這種持續的情況時，從你所看到的交易環境來看，這實際上是什麼樣的？與您今天看到的對話和交易環境相比，十月到目前為止，情況可能發生了哪些變化？

Yes. I would say that the mood in a lot of clients has -- for the last year, candidly, has been just more questioning again, it's entirely consistent with organizations really doing candidly, a better level of scrutiny than when money was free. People are acting now across the board like they're really respecting businesses that are in a position to deliver profitability. So you get more checking of types of deals and that can lead to slightly longer sales cycles. I will tell you, I'm not seeing anything that is troubling as we enter the fourth quarter.

是的。我想說，坦白說，去年很多客戶的情緒再次受到更多質疑，這與組織真正坦誠地做事完全一致，比金錢免費時進行了更好的審查。現在，人們的普遍表現就好像他們真的尊重那些能夠獲利的企業。因此，您可以更多地檢查交易類型，這可能會導致銷售週期稍長一些。我會告訴你，當我們進入第四季時，我沒有看到任何令人不安的事情。

The reality is that customers also really, really want to set their businesses up for success in 2024. And I've had conversations with many clients that see us as being central to how they're going to gain the real efficiencies, which isn't around the cost of software, but it's really around the cost of their operations and their ability to engage. But I think I've said over the last year, we've been through lots of recessionary periods. And when things get a little tougher, even if we're not in a recession, I think people are kind of acting a little like we are. When that happens, we sort of aim the needle as it were how do we deliver really tangible things for clients as opposed to focusing on generating revenue, which are the things are happier, everybody who wants to spend time on that. Does that give you some color?

現實情況是，客戶也真的非常希望他們的業務在 2024 年取得成功。我與許多客戶進行了交談，他們認為我們是他們如何獲得真正效率的核心，而這並不是「不是圍繞軟體的成本，而是圍繞著他們的營運成本和參與能力。但我想我在去年已經說過，我們經歷了很多衰退期。當事情變得更困難時，即使我們沒有陷入衰退，我認為人們的行為也有點像我們。當這種情況發生時，我們的目標是如何為客戶提供真正有形的東西，而不是專注於創造收入，這是讓每個願意花時間在上面的人更快樂的事情。這給你一些顏色嗎？

No, definitely. There's helpful context there, especially for the 4Q view. So I definitely appreciate the commentary there. And then maybe shifting gears a little bit more to the sales and marketing changes and initiatives. I guess, as we think about what that means for closing out the year and the improvement in productivity and efficiency there, I guess, what has been the feedback from customers that you talked to in terms of the impact that could potentially have? And as we think about the free cash flow impact, both in the quarter moving forward, I guess how should we be thinking about the impact that those changes would be having to the cash flow specifically?

不，絕對是。這裡有一些有用的背景信息，特別是對於第四季度的觀點。所以我非常感謝那裡的評論。然後也許會在銷售和行銷方面的變化和舉措上進行更多調整。我想，當我們思考這對結束這一年以及生產力和效率的提高意味著什麼時，我想，您所採訪的客戶對可能的影響有何回饋？當我們考慮未來兩季的自由現金流影響時，我想我們應該如何考慮這些變化對現金流的具體影響？

So there's a couple of pieces to that question. So let me see if I can hit a couple of pieces, Steve. So the first is we made changes -- we made some organizational changes in the last few months. And those are never easy, and we have a lot of empathy for the people that were impacted. Those changes have not actually resulted in any improvement in free cash flow for the business, yes, as you might imagine, and they will have a very small, if any, impact even in Q4 that the actions taken. However, they'll have a full year impact in 2024. So that's just something that's almost kind of on the shelf for an improvement in 2024. I wanted to also clarify one thing. When I talked about achieving $200 million in free cash flow, I'm actually referring to the new more traditional measure. If you were to take into account onetime items, et cetera, naturally under the way that we were previously talking about, that number would be much higher. So just to clarify that because I know that was maybe a little vague in my script.

這個問題有幾個部分。所以讓我看看我是否能打出幾個棋子，史蒂夫。首先是我們做出了改變——我們在過去幾個月裡做了一些組織上的改變。這些從來都不是一件容易的事，我們對受影響的人深表同情。這些變化實際上並沒有為企業的自由現金流帶來任何改善，是的，正如你可能想像的那樣，即使在第四季度，這些變化也會對所採取的行動產生非常小的影響（如果有的話）。然而，它們將在 2024 年產生全年影響。因此，這幾乎是在 2024 年進行改進的事情。我還想澄清一件事。當我談到實現 2 億美元的自由現金流時，我實際上指的是新的更傳統的衡量標準。如果你考慮到一次性物品等，自然按照我們之前討論的方式，這個數字會高很多。所以只是為了澄清這一點，因為我知道我的劇本中可能有點含糊。

I'd also say that we worked very hard, and I think the team did a great job to take and make the changes so that we could enter Q4 with the changes behind us. And we've basically done that. So I'm not expecting that we would tell you next year the Q4 has been materially implemented by change. Right now, I would say we're at the heavy execution mode.

我還想說，我們工作得非常努力，我認為團隊在採取和做出改變方面做得很好，這樣我們就可以帶著這些改變進入第四季。我們基本上已經做到了。因此，我並不指望我們明年會告訴您第四季度已經透過變革進行了實質實施。現在，我想說我們正處於繁重的執行模式。

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。

Can I ask you about the term out performance? What drove that was federal part of it or anything else to kind of call out? Secondly, on cloud ACV growth, that seems to continue to decelerate. And I hear your point on overall ACV growth being more important. But as you launch Infinity '23, which adds kind of a lot of GenAI capabilities on the cloud side, I believe, should we expect cloud ACV growth to kind of trough at some point going forward?

可以問一下學期末的表現嗎？是什麼推動了它的聯邦部分或其他什麼需要呼籲的？其次，雲 ACV 的成長似乎持續放緩。我聽到你的觀點，即 ACV 的整體成長更為重要。但當你推出 Infinity '23 時，它在雲端增加了許多 GenAI 功能，我相信，我們是否應該預期雲端 ACV 的成長在未來某個時候會陷入低谷？

Yes. So great question. So when you see quarters -- so if you look at kind of newer organizations or even newer kind of activity that a client is doing, there is a higher amount of those that typically go Pega Cloud. That is kind of just because Pega Cloud -- when you have clients that may expand existing workflows, existing relationships, they may put -- bring on a new project and they already are managing Pega in a client cloud environment naturally, that's the way that they would purchase or expand their relationship with Pega.

是的。很好的問題。因此，當您查看季度時 - 如果您查看客戶正在進行的較新的組織或甚至較新的活動，您會發現有更多的組織通常會選擇 Pega Cloud。這只是因為Pega Cloud——當您的客戶可能會擴展現有工作流程、現有關係時，他們可能會引入一個新項目，並且他們已經自然地在客戶端雲端環境中管理Pega，這就是這樣的方式他們會購買 Pega 或擴大與 Pega 的關係。

So when you see quarters where you typically have a higher percentage of kind of term versus SaaS, the primary driver for that is probably just a little bit outsized expansion with existing clients that may not -- now many of our clients have both. So it kind of depends on which application environment there or which set of use cases they're expanding. But that's typically -- it's really not -- it's not a change in strategy or a change in buying behavior. It just comes down not to like how -- kind of how you -- how the difference between the 2. And in terms of like a net new workload versus existing workload. So that's kind of why you might see the drop.

因此，當你看到與SaaS 相比，你通常擁有更高百分比的術語時，其主要驅動因素可能只是現有客戶的過度擴張，而現有客戶可能不會——現在我們的許多客戶都擁有這兩種術語。因此，這在某種程度上取決於那裡的應用程式環境或他們正在擴展的用例集。但這通常不是策略的改變，也不是購買行為的改變。歸根究底就是不喜歡兩者之間的差異，以及淨新工作負載與現有工作負載之間的差異。這就是您可能會看到下降的原因。

I would also say that based on just the vibrations in the market here as we enter Q4, I'd be surprised if we don't see a pickup in the cloud rates as we go into the next quarter or 2.

我還想說，根據進入第四季時市場的波動，如果進入下一季或第二季時我們沒有看到雲端費率回升，我會感到驚訝。

Yes. I think that's -- I mean you -- Pinjalim, you know that the difference between a Q4 typically had a little bit more client cloud license. And that's typically because that tends to be a period where you have clients kind of look at increasing their spend with us during a renewal period. So just think about that kind of same activity can happen sometimes in other quarters.

是的。我認為——我是說你——Pinjalim，你知道第四季度的區別通常是擁有更多的客戶端雲端授權。這通常是因為在這個時期，客戶往往會考慮在續約期間增加在我們這裡的支出。因此，想一想，類似的活動有時也會發生在其他地方。

Yes, understood. Just to be clear, for this quarter in term, were there any very large deals that swung kind of the number towards the positivity 1 or 2 large deals or just...

是的，明白了。需要明確的是，就本季度而言，是否有任何非常大的交易使數量轉向積極的 1 或 2 筆大型交易，或者只是......

No, it wasn't actually. No. We -- in our movement, that's a very fair question. But no, Q3 was not skewed by like 1 deal or 2 deals of that. And also as we move a little bit more towards as we refer to in a more consumption-based, you do actually have more repeatable growth and not as many very large kind of shock deals. Clients are increasing over time as opposed in our previous model, even in the perpetual model, they are tended to be kind of whales as we used to call them.

不，實際上不是。不。我們——在我們的運動中，這是一個非常公平的問題。但不，第三季並沒有受到 1 筆或 2 筆交易的影響。而且，當我們朝著更以消費為基礎的方向邁進時，實際上確實有更多的可重複成長，而不是那麼多非常大規模的衝擊性交易。與我們之前的模型相反，客戶隨著時間的推移而增加，即使在永久模型中，他們往往是我們過去所說的鯨魚。

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。

Alan, when you're talking to customers, where the dollars per AI spend coming from? Are they coming from existing IT budgets and maybe crowding out other areas of spend? Are you seeing customers create net new budget dollars and potentially actually expand their overall IT spend to account for those investments?

艾倫，當您與客戶交談時，每個人工智慧支出的美元從何而來？它們是否來自現有的 IT 預算並可能擠佔其他領域的支出？您是否看到客戶創造了新的淨預算資金，並有可能實際擴大其整體 IT 支出以適應這些投資？

So we're seeing both. And happily, we are seeing the innovation budgets starting to come forward. We've had with a client actually just yesterday announced they were putting another several hundred million dollars into their innovation budget, which is a great thing to hear from a client that we're currently selling to. So I think that it will affect some traditional spend for sure, but they're really looking to make sea changes in their business over the next couple of years, and they're all not wanting to fall behind.

所以我們兩個都看到了。令人高興的是，我們看到創新預算開始出現。事實上，就在昨天，我們與一位客戶宣布，他們將在創新預算中再投入數億美元，從我們目前正在銷售的客戶那裡聽到這樣的消息真是太棒了。因此，我認為這肯定會影響一些傳統支出，但他們確實希望在未來幾年內對其業務做出巨大改變，而且他們都不想落後。

Very helpful. Then Ken, do you still feel Pega is on track to complete the subscription transition this year? And then I know you put out those targets of being a Rule of 40 business as you exit 2024. Given constant currency ACV growth ticked down to 10% this quarter, how should we think about the balance between growth and margin as you look to reach those targets?

很有幫助。那麼 Ken，您仍然認為 Pega 預計在今年完成訂閱過渡嗎？然後我知道你們提出了在2024 年退出時成為40 條規則業務的目標。考慮到本季不變貨幣ACV 成長率下降至10%，當你們希望達到目標時，我們應該如何考慮成長和利潤之間的平衡那些目標？

So we do believe we'll be done with the subscription transition. In fact, I would even say it go as far as to say we're really done now. We've had a few years where our perpetual license revenue has been under 5% of our total book -- sorry, perpetual bookings have been under 5% for now, probably 4 years maybe. And so I think the business has normalized much more. Naturally, we'll have variability quarter-to-quarter, and you do have the unfortunate accounting of 606. But that said, take that aside, the billings, the consistency of billings, the predictability of billings, that is very much normalized in our business now, Jake.

因此，我們確實相信我們將完成訂閱轉換。事實上，我甚至可以說我們現在真的完成了。幾年來，我們的永久授權收入一直低於總預訂量的 5%——抱歉，永久預訂目前一直低於 5%，可能需要 4 年。所以我認為業務已經更加正常化。當然，我們每個季度都會有變化，而且你確實有606 的不幸會計。但是，話雖如此，拋開這一點，賬單、賬單的一致性、賬單的可預測性，這在很大程度上是標準化的現在我們該談談了，傑克。

And then when you think about exiting 2024. I mean it certainly looks to us that 2024 would exit with a much higher contribution on the free cash flow than the growth, just even where we are now, naturally, as a Rule of 30-type company, cash flow is higher than our growth rate. And I think it's being realistic about where we thought we would land, we always kind of have this model of 15, 25 kind of company was kind of a very nice sustainable model. And so we have a little work to do on the growth side, but I think we're well on track to actually be kind of mid- to high 20s free cash flow company in 2024. That's our goal. Naturally, we're still another quarter away from thinking about our guidance for 2024, but we've been very transparent with that's our objective.

然後，當你考慮退出 2024 年時。我的意思是，在我們看來，2024 年退出時對自由現金流的貢獻將遠高於增長，即使我們現在處於 30 型規則的自然狀態公司，現金流高於我們的成長率。我認為我們對於我們的目標要現實一點，我們總是有這種 15、25 家公司的模式，這是一種非常好的永續發展模式。因此，我們在成長方面還有一些工作要做，但我認為我們預計在 2024 年真正成為 20 多歲的自由現金流公司。這就是我們的目標。當然，我們距離考慮 2024 年的指導方針還有四分之一的時間，但我們對這就是我們的目標非常透明。

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。

Alan, you called out EMEA in the script. So just curious if you can expand on the health of the customer base in those regions and just the overall kind of macro environment there?

艾倫，您在劇本中提到了 EMEA。那麼，您是否可以擴展這些地區客戶群的健康狀況以及那裡的整體宏觀環境？

Yes. I would say that if you go back a couple of quarters, EMEA was looking a little tepid. I was very pleased with my last visit. And I'm actually coming back there in Q4 because we see things that are set to be done. So I'm seeing a return in most of the countries in EMEA, not all of them. Some of them are still a little tougher, I would say, Germany, for instance. But the U.K. there's a lot of political stuff going on there, but they're very interested in trying to figure out how to reframe those businesses to be more profitable.

是的。我想說，如果你回顧幾個季度，歐洲、中東和非洲地區看起來有點不溫不火。我對上次訪問感到非常滿意。實際上我會在第四季度回到那裡，因為我們看到了即將完成的事情。因此，我看到歐洲、中東和非洲地區的大多數國家（而非全部）都出現了回歸。我想說，其中一些國家仍然更強硬一點，例如德國。但在英國，那裡發生了許多政治事件，但他們非常有興趣嘗試找出如何重組這些業務以提高利潤的方法。

Great. And then maybe can you give an update on the government vertical, what use cases are you best positioned for? And just in general, the level of deal activity that you're seeing in that vertical?

偉大的。然後，也許您可以提供有關政府垂直領域的最新信息，您最適合哪些用例？總的來說，您在該垂直領域看到的交易活動水平如何？

Yes. We're seeing a lot of activity in that vertical. And we just hired Jen Pratt, a new senior executive who we announced, who is pushing forward to really, I think, help us be much more effective in that vertical. So I'm very excited, and I love the way she's coming up to speed, though she's only been here a couple of months now. What I've seen in that vertical is a lot of interest. Our bellwether clients like the IRS and the FBI and Department of Justice, there's a lot of stuff going on, and there are major needs in those businesses. The use cases we do is we handle serious workflows. But candidly, there are workflows that are kind of pushing tickets around. Those aren't the Pega workflow. The Pega workflows is where you actually take a meaningful piece of work that has typically a lot of data associated in it and with it that has to live over a long period of time, which is perfect for the government environment.

是的。我們看到該垂直領域有很多活動。我們剛剛聘請了珍·普拉特（Jen Pratt），我們宣布任命他為新任高級管理人員，我認為他正在努力幫助我們在這個垂直領域變得更有效率。所以我非常興奮，我喜歡她加快步伐的方式，儘管她來這裡才幾個月。我在這個垂直領域看到的東西很有趣。我們的領頭羊客戶，如國稅局、聯邦調查局和司法部，正在發生很多事情，這些企業也有重大需求。我們所做的用例是處理嚴肅的工作流程。但坦白說，有些工作流程會推動門票。這些不是 Pega 工作流程。 Pega 工作流程是您實際進行一項有意義的工作的地方，該工作通常包含大量相關數據，並且必須長期存在，這對於政府環境來說是完美的。

And that needs a combination of automation, auditing and improve citizen engagement, which is now increasingly top of mind for organizations. So government, not just in the U.S., but when I take a look at what's going on with some major, major work we're doing in the U.K., when I look at work we're actually in Germany, the trip I just took to APAC. We have more than a dozen government systems running in Singapore, for instance. I'm seeing lots of things in every region that make me feel great about what Pega is doing.

這需要將自動化、審計和提高公民參與結合起來，這現在越來越成為組織的首要考慮因素。因此，政府，不僅是在美國，而且當我看看我們在英國正在做的一些重大工作的情況時，當我看看我們實際上在德國的工作時，我剛剛進行的旅行至亞太地區。例如，新加坡有十多個政府系統在運作。我在每個地區看到的很多事情讓我對 Pega 所做的事情感到非常滿意。

And just one additional comment on that. If you think about a vertical, so to speak, that is more prone to keep legacy applications plugged in, but be able to try to modernize kind of at the user layer like the -- which really feeds well into Pega orchestrating and being able to interact and interface with data set with systems that have maybe embedded in the government, I mean that is a very strong value proposition to be able to improve the customer experience, the applications, modernize, go to cloud, but yet still interact with some of these systems that they really just -- the government really just can't mothball.

對此僅作補充評論。如果你考慮一個垂直領域，可以這麼說，那就更容易保持遺留應用程式的插入，但能夠嘗試在用戶層進行現代化，例如——這確實很好地融入了 Pega 編排並能夠與可能嵌入政府的系統的資料集進行互動和接口，我的意思是，這是一個非常強大的價值主張，能夠改善客戶體驗、應用程式、現代化、轉向雲，但仍然與一些這些系統實際上是政府無法封存的。

Our next question comes from Rishi Jaluria with RBC.

我們的下一個問題來自 RBC 的 Rishi Jaluria。

Maybe I want to go back to better understanding the macro impact. And more specifically, think about what are customers and partners saying about large-scale digital transformations because as we've been hearing from partners that those are things that a lot of customers might be dragging their feet on given the uncertain macro. But simultaneously, I'd have to imagine as companies are contemplating their generative AI strategy, digital transformation to enable that and integrate workflows becomes more and more important. So maybe can you help us understand what you're seeing in terms of those and kind of weighing the puts and takes about both the near-term macro as well as how customers are kind of trying to position themselves long term to embrace generative AI and your role in enabling that? And then I've got a quick follow-up.

也許我想回去更好地理解宏觀影響。更具體地說，想想客戶和合作夥伴對大規模數位轉型的看法，因為正如我們從合作夥伴那裡聽到的那樣，鑑於宏觀經濟的不確定性，許多客戶可能會拖延這些事情。但同時，我不得不想像，隨著公司正在考慮他們的生成式人工智慧策略，實現這項策略的數位轉型和整合工作流程變得越來越重要。因此，也許您可以幫助我們了解您所看到的情況，並權衡近期宏觀方面的看跌期權和期權，以及客戶如何嘗試長期定位自己以接受生成式人工智能和您在實現這一目標方面所扮演的角色？然後我會進行快速跟進。

Sure. So it's a good question. I would say there are actually a couple of parallel threats to pull on here. So there's no question when the macro becomes a little more (inaudible) that organizations want to make sure what they're really investing in is practical and pragmatic. So they want to make sure what they're going to see is going to have results. And Pega is very, very well equipped for that environment. We've switched ourselves away from the -- boy we help you really boost revenue much more to, hey, we're going to help you make decisions better. We're going to help you drive workforce better in ways that literally get their work done.

當然。所以這是一個好問題。我想說，這裡實際上存在一些並行的威脅。因此，毫無疑問，當宏觀變得更加（聽不清楚）時，組織希望確保他們真正投資的東西是實用且務實的。所以他們希望確保他們將看到的事情會產生結果。 Pega 非常非常適合這種環境。我們已經從「我們幫助您真正增加收入」轉變為「嘿，我們將幫助您更好地做出決策」。我們將幫助您更好地推動員工真正完成工作。

So that's something that I think we're well suited for. There is a lot of buzz around generative AI. But there's also a lot of what I would describe as client gambling and experimentation. Customers are trying to figure it out. And so a lot of them are trying, they're buying, they're getting developers to build things, lots of little pots stirring, but they're also looking for the places in which GenAI can be used to really drive that previous category, the category of really differently approaching pragmatic results.

所以我認為我們非常適合。關於生成式人工智慧有很多討論。但也有很多我所謂的客戶賭博和實驗。客戶正在嘗試解決這個問題。所以他們中的很多人都在嘗試，他們在購買，他們讓開發人員來建造東西，很多小罐子在攪拌，但他們也在尋找 GenAI 可以用來真正推動之前類別的地方，真正以不同方式接近實用結果的類別。

And I've seen customers get really excited about what we can do. I was visiting with a client who put (inaudible) to one of its call centers to be able to use what we call voice AI to be able to interpret and fill in screens and do a whole variety of things to massively improve productivity, which costs they're looking for but also significantly reduce their annual time and improves the customer experience. So I think it's going to be interesting for the investment community to try to delineate what action in the market is tied to the AI type and the experimentation, which in some cases, it's not going to persist and what's going to be tied to the real core systems evolutions, they're going to work now and going to work into future years. Does that help?

我看到客戶對我們的能力感到非常興奮。我正在拜訪一位客戶，他將（聽不清楚）其呼叫中心之一設定為能夠使用我們所說的語音人工智慧來解釋和填寫螢幕，並執行各種操作來大幅提高生產力，這需要花費成本他們正在尋找，但也顯著減少他們的年度時間並改善客戶體驗。因此，我認為投資界嘗試描繪市場上的哪些行為與人工智慧類型和實驗相關是很有趣的，在某些情況下，它不會持續存在，而哪些行為將與真實的行為相關。核心系統的演變，它們現在將發揮作用，並將在未來幾年發揮作用。這樣有幫助嗎？

Yes, absolutely. Very helpful. And then, Ken, just a follow-up for you on the gross margin side. So you continue to show a pretty impressive cloud gross margin expansion. How should we be thinking about terminal gross margins on the cloud side, especially as you do have a little bit of multi-tenancy around the core, you are embracing Kubernetes. Is this something that over time could become an 80% cloud gross margin business? Or is there anything structure that might be holding you back from that?

是的，一點沒錯。很有幫助。然後，肯，我想對您介紹一下毛利率方面的情況。因此，您的雲毛利率繼續呈現出令人印象深刻的成長。我們應該如何考慮雲端的終端毛利率，特別是當你在核心周圍確實有一點多租戶時，你正在擁抱 Kubernetes。隨著時間的推移，這是否會成為一項毛利率高達 80% 的雲端業務？或者有什麼結構可能會阻礙你這樣做嗎？

Yes, great question. So I will say this with a level of confidence, but also we have to get there. When we first started Pega Cloud, we were hoping to get to 70%. And then when we got close to 65%, we said, we should be 75%. And now we're approaching 75%, we're saying we should be 80%. And so I do see a path to 80%. I don't know how hard it will be to get much above 80%. It might be surprisingly easy. It might be terribly difficult. But I would say now that we're approaching 75%, we definitely see a path to 80%.

是的，很好的問題。因此，我會充滿信心地說出這一點，但我們也必須實現這一目標。當我們第一次啟動 Pega Cloud 時，我們希望達到 70%。然後當我們接近 65% 時，我們說我們應該達到 75%。現在我們已經接近 75%，我們說應該是 80%。所以我確實看到了通往 80% 的道路。我不知道要達到80%以上有多難。這可能出奇地容易。這可能非常困難。但我想說，現在我們已經接近 75%，我們肯定會看到通往 80% 的道路。

Our next question comes from Raimo Lenschow with Barclays.

我們的下一個問題來自巴克萊銀行的 Raimo Lenschow。

This quarter, we obviously had the term was much better than cloud. And you kind of talked about some of the reasons there. If you think about the next steps for you guys now as we kind of maneuvering through the downturn. Is there any plans to kind of double-click more on the cloud side? Or is that -- do you think you will continue to stay on that. The customer has a choice there? And then one, Ken for you. Like if I think about the margin progression, obviously, very good progress this year. But as we get ready for more AI investments, potentially better times ahead. How do you think about that balance of growth versus investments for going forward?

本季度，我們顯然發現這個術語比雲端好得多。您談到了其中的一些原因。如果你們現在考慮一下你們接下來要採取的步驟，因為我們正在渡過經濟低迷時期。是否有計劃在雲端進行更多雙擊？或者你認為你會繼續堅持下去嗎？客戶有選擇嗎？還有一位，肯給你。就像我考慮利潤率進展一樣，顯然，今年的進展非常好。但隨著我們為更多的人工智慧投資做好準備，未來可能會更好。您如何看待未來成長與投資之間的平衡？

So I'll take the first one, and maybe, Alan, you can give your thoughts on AI, and how AI might help the margin profile of us and our clients. So the first piece, we are fully committed to Pega Cloud as being what we really are excited about our clients leveraging. That said, we understand clients are on a journey to get there, and we want to support them through that journey. And in some cases, that journey may take longer than we may hope that it would because they have unique operational needs. And quite frankly, they may not be ready to move to cloud at the pace that other companies will. So we are -- our commitment to Pega Cloud is unchanged, completely committed, completely committed to scale it and modernize and make the experience better for clients, always automate, et cetera, improved margins. But that said, we are not moving away from our ability to support our clients and client choice. So that's our stance. Alan, do you want to talk a little bit about AI and how that might fit into the margin profile?

所以我會採取第一個，也許，艾倫，你可以發表你對人工智慧的想法，以及人工智慧如何幫助我們和我們的客戶的利潤狀況。因此，第一部分，我們完全致力於 Pega Cloud，因為我們對客戶利用 Pega Cloud 感到非常興奮。也就是說，我們了解客戶正踏上實現這一目標的旅程，我們希望在這段旅程中為他們提供支援。在某些情況下，這個過程可能比我們希望的要長，因為他們有獨特的營運需求。坦白說，他們可能還沒有準備好以其他公司的速度遷移到雲端。所以我們對 Pega Cloud 的承諾沒有改變，完全致力於擴展它並實現現代化，為客戶提供更好的體驗，始終實現自動化，等等，提高利潤。但話雖如此，我們並沒有放棄支援客戶和客戶選擇的能力。這就是我們的立場。艾倫，您想談談人工智慧以及它如何適應利潤狀況嗎？

Yes. So I think this is going to be really interesting as we go forward. And those of you who were there may recall, that in my closing presentation at PegaWorld, which was in June, I stood up and I said we're going to be using these new technologies, which -- many of which we've now released more are coming as soon as Q1. We're going to use these new technologies to do 4 things. And just to rehighlight the 2 that are relevant to your question. One is to put Pega at your fingertips. So to radically change the training and education and ease-of-use profile of Pega technology by using this to really help people build and guide faster.

是的。所以我認為隨著我們的前進，這將非常有趣。在場的人可能還記得，在 6 月我在 PegaWorld 的閉幕演講中，我站起來說我們將使用這些新技術，其中許多技術我們現在已經有了更多內容將於第一季發布。我們將利用這些新技術來做四件事。只是為了重新強調與您的問題相關的兩個。一是讓 Pega 觸手可及。因此，要徹底改變 Pega 技術的培訓和教育以及易用性概況，真正幫助人們更快地建立和指導。

And the second is what we -- I actually said we were going to report in June, which is a little bit of a time, but it's come out in front of us that I expected that we have double productivity of people building in Pega, which should open up a major stream of new opportunities for our clients to get results faster and better. The other piece is we also have many -- through these sort of accelerators that we build on these GenAI capabilities, important new features that will also make the customers' operations more productive and improve their cost profile as well to the use of GenAI. So we have a lot that we are working on right now that I think is going to very, very much change the view as we enter '24 and as we go through '24.

第二個是我們 - 我實際上說過我們將在 6 月報告，這是一個有點時間，但它擺在我們面前，我預計我們的人員生產力將在 Pega 建設中翻倍，這將為我們的客戶帶來大量新機會，讓他們更快、更好地獲得結果。另一方面，我們還有很多——透過我們在 GenAI 功能上建立的加速器，重要的新功能也將使客戶的營運更加高效，並改善他們的成本狀況以及 GenAI 的使用。因此，我們現在正在做很多工作，我認為當我們進入 24 世紀並經歷 24 世紀時，這些工作將會非常非常改變我們的觀點。

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, starting with you, I appreciate your comments on generative AI in your prepared remarks. And look, I realize it's still early for that solution, but are you seeing the offering attract like a new type of customer to the company?

艾倫，首先感謝您在準備好的發言中對生成式人工智慧的評論。看，我意識到該解決方案還為時過早，但是您是否看到該產品吸引了公司的新型客戶？

Yes, I am. I'm seeing the -- remember, we have a target organization structure. So it's really a new type of buyer inside the customer who -- if you want to really get filled for this, just go to that generative AI page on pega.com that I mentioned, which we sit with business buyers. You think of this as being, in many ways, a technical part of the sale, but we sit with business buyers, and we say, why don't you put in whatever workflows you worry about or whatever ways of doing business that you are concerned about.

我是。我看到－記住，我們有一個目標組織架構。因此，這實際上是客戶內部的一種新型買家——如果你想真正滿足這一點，只需訪問我提到的 pega.com 上的生成人工智慧頁面，我們與商業買家坐在一起。在很多方面，您認為這是銷售的技術部分，但我們與商業買家坐在一起，我們說，為什麼您不加入您擔心的任何工作流程或您正在做的任何業務方式關心。

The most interesting I had at the Cyprus International Banking Conference a month ago. Obviously, we had a senior executive from a large U.K. bank, asked to see what should the process be for closing the account of a politically exposed person. If you read the news, you may note that the -- believe it was the CEO Koos was fired, because they had done that inappropriately. And what came out was mind-blowing. And it completely changes the whole way you think about how you want to operate and develop processes. So try it, and we've got a whole generation -- whole new area of buyers where we did use to have something like that, that had shown before. And now we've got thousands in their playing with it.

最有趣的是我在一個月前的塞浦路斯國際銀行會議上看到的。顯然，我們有一位來自英國大型銀行的高階主管，詢問關閉政治人物帳戶的流程應該是什麼。如果你有讀過新聞，你可能會注意到——相信是執行長庫斯被解雇了，因為他們做得不當。結果令人興奮。它完全改變了您思考如何操作和開發流程的整個方式。所以嘗試一下，我們已經有了整個世代——全新的買家領域，我們過去確實擁有類似的東西，以前已經展示過。現在我們已經有成千上萬的人在玩它。

That's helpful. And then, Ken, on the go-to-market front, I believe you noted organizational changes to the sales team that coincided with the workforce reduction. I was wondering if you could just detail a little bit further what those or changes, where I assume you somewhat flatten the sales organization.

這很有幫助。然後，肯，在進入市場方面，我相信您注意到銷售團隊的組織變化與勞動力的減少同時發生。我想知道您是否可以進一步詳細說明這些或變化，我假設您在某種程度上扁平化了銷售組織。

Well, we're referring to the changes that we had previously disclosed and we talked about, Mark, which is to put a lot of the selling type resources closer to the client to put a lot of our technical both presales and post-sales resources kind of closer together so that we could actually have like kind of a continuous engagement from presales to post go live. We've looked at the kind of the state, the hierarchy of the organization in terms of the layers, the number of management layers. We've looked at bringing people kind of that did similar type roles into a unified mission. Those are the types of activities that we have that really were part of what I was referring to.

嗯，我們指的是我們之前披露的變化，馬克，我們談到的變化是讓許多銷售類型的資源更接近客戶，讓我們的許多技術售前和售後資源投入更加緊密地聯繫在一起，這樣我們實際上就可以從售前到上線後進行持續的參與。我們已經研究了國家的類型、組織的層級結構、管理階層的數量。我們考慮過將具有類似角色的人員納入統一的任務中。這些是我們所進行的活動類型，它們確實是我所指的一部分。

And it's good to have that all behind us.

很高興這一切都在我們身後。

Yes.

是的。

Our next question comes from Joe Meares with Truist Securities.

我們的下一個問題來自 Truist Securities 的 Joe Meares。

I had another question about the headcount reductions. Are you guys planning to rely more on partners now in light of reducing headcount in sales and marketing? And then just as far as -- it was helpful to hear that it's not going to add to free cash flow in 2023. And you're not asking you to guide to 2024, but just curious what the potential dollar impact from sales and marketing could be there? And the fact that you're going to be getting over $200 million in free cash flow potentially this year, does that bring that 3 to 5-year $500 million free cash flow target closer to the 3-year end of that range?

我還有一個關於裁員的問題。鑑於減少銷售和行銷人員數量，你們現在是否計劃更多地依賴合作夥伴？然後就 - 聽到它不會增加 2023 年的自由現金流是有幫助的。而且你並不是要求你指導 2024 年，只是好奇銷售和營銷對美元的潛在影響可能在那裡嗎？事實上，今年您可能會獲得超過 2 億美元的自由現金流，這是否會使 3 至 5 年 5 億美元的自由現金流目標更接近該範圍的 3 年末？

I'll take the last part of your question. But -- so the -- we are very -- we feel great about the progress that the organization has made in the results. Naturally, some of the decisions we made are hard, and we -- but we had to make them. And -- when you think about an annual run rate impact of a change like that, a rule of thumb that I always use is what the restructuring charges times 4. That's just an easy rule of thumb. I would say most companies kind of have that type of situation.

我將回答你問題的最後一部分。但是，所以，我們對組織在結果方面取得的進展感到非常高興。當然，我們做出的一些決定是艱難的，但我們必須做出這些決定。而且——當你考慮這樣的變化對年度運行率的影響時，我總是使用的經驗法則是重組費用乘以 4。這只是一個簡單的經驗法則。我想說大多數公司都有這種情況。

So if you look at our charge times 4, that's typically the run rate savings. You're probably talking $60 million to $70 million of kind of annual kind of run rate impact from the change that we made last quarter. And now when you talk about like us getting to $500 million, listen, we're thinking we're going to be above 2, $500 million still is a ways away. That said, I do think it shows us a path to get to that number and it's certainly within the range of what we talked about. If we can get there a year earlier, while that would be great, but right now, we're quite frankly, focused on Q4 of '23, as you can imagine. So I don't want to get too far ahead of ourselves.

因此，如果您查看我們的充電時間 4，這通常是節省的運行率。您可能正在談論我們上季度所做的更改對年度運行率的影響為 6000 萬至 7000 萬美元。現在，當你談論我們要達到 5 億美元時，聽著，我們認為我們將超過 2 億美元，距離 5 億美元還有很長的路要走。也就是說，我確實認為它向我們展示了達到該數字的途徑，而且它肯定在我們討論的範圍內。如果我們能早一年實現這一目標，那就太好了，但現在，坦白說，我們專注於 23 年第四季度，正如你可以想像的那樣。所以我不想走太遠。

Sorry, I remind me the first part of the question again because I think that was Alan question.

抱歉，我再次提醒我問題的第一部分，因為我認為那是艾倫的問題。

Yes. No, it was more just if you're planning to rely more so on partners given the you're reducing headcount in sales and marketing.

是的。不，如果您計劃更多地依賴合作夥伴，因為您正在減少銷售和行銷人員數量，那就更公平了。

I don't think we're depending anymore on partners as a result of reducing headcount, but we are emphasizing the importance of partner engagement with our account teams. So partners are really critical. But it's not like we're going to have to replace the changes we've made. A lot of the changes we made, frankly, were a simplification of some of the management structures and reducing the number of power organizations that candidly, one of our clients would have to deal with as well as internally that we're creating silos. And I'm feeling really good about what we're able to do.

我認為，由於人員減少，我們不再依賴合作夥伴，但我們強調合作夥伴與我們的客戶團隊互動的重要性。所以合作夥伴真的很關鍵。但這並不是說我們必須更換我們所做的更改。坦白說，我們所做的許多改變是簡化了一些管理結構，並減少了坦白說，我們的一位客戶必須處理的權力組織的數量，以及我們在內部創建的孤島。我對我們能夠做的事情感覺非常好。

Great. And then just as a follow-up around GenAI. Some of the customers we've spoken to over the last 3 or 4 months have noted that they don't even really know how GenAI can be applied to their businesses yet. So they don't feel that they're really in a position to make a purchase. And so I'm just curious if you're seeing somewhat of like a pause here in terms of actually signing contracts? And if that means that this could be a little bit more accretive to 2024 than maybe 2023? And do you think that you'll have any case studies by, say, the next Investor Day next year around this customer saw x savings from our GenAI solution. Just curious if you think things will be that far down the road by...

偉大的。然後作為 GenAI 的後續行動。我們在過去 3 或 4 個月採訪過的一些客戶指出，他們甚至還不知道如何將 GenAI 應用到他們的業務中。所以他們覺得自己沒有能力購買。所以我只是好奇你是否在實際簽署合約方面看到了某種暫停？如果這意味著到 2024 年可能比 2023 年更具增值性？您是否認為您會在明年的下一個投資者日之前進行任何案例研究，圍繞該客戶從我們的 GenAI 解決方案中節省了 x 成本。只是好奇你是否認為事情會在未來那麼遙遠......

I'm quite confident we will have case studies for next PegaWorld. I think we could even start drafting them in Q1. It's not like they'll be waiting for Q2. The -- one of the things that I said was that I think a lot of clients are experimenting because they're not entirely sure where, how they should use it. And if there are risks, if there aren't risks. But when you take a look at, for example, if you do the GenAI demo I talked about, you'll see the clients see them and they say, "Oh my God, I've got a whole new way to think about my reengineering and transformation process. I can actually use a lot of collective wisdom to bring the best practices that at least stimulate my thinking. And I think it's an example of very practical and everyone that sees that as well. So we'll see what you say.

我非常有信心我們將為下一屆 PegaWorld 提供案例研究。我認為我們甚至可以在第一季開始起草它們。他們不會等待第二季。我所說的一件事是，我認為很多客戶正在嘗試，因為他們不完全確定應該在哪裡以及如何使用它。如果有風險，如果沒有風險。但是，當你看一下，例如，如果你進行我談到的 GenAI 演示，你會看到客戶看到它們，他們會說，“天哪，我有了一種全新的方式來思考我的重新設計和轉型過程。我實際上可以利用大量的集體智慧來帶來至少能激發我思考的最佳實踐。而且我認為這是一個非常實用的例子，每個人也都看到了這一點。所以我們會看看你會做什麼說。

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 wanted to ask on -- sorry if I'm beating a dead horse here, but a generative AI-related topic. Primarily I'm curious here, are you seeing any sort of change in priorities among your partners? Where they're investing or allocating into their practices as we've seen coding copilot become more robust and become more productionized.

我想問一個與生成人工智慧相關的話題——抱歉，如果我在這裡打了個死馬。我主要好奇的是，您是否發現合作夥伴的優先事項發生了任何變化？他們在實踐中進行投資或分配，我們已經看到編碼副駕駛變得更加強大並且變得更加生產化。

So first of all, I would like to counsel you to not casually use horse metaphors. We never talk about dead horses in Pega. We're leading them to water or any of that or any of those sorts of things. But having said that -- keep it clean, that's all I'd say right? But -- and the horse is flying strong, so don't worry about that. The partners are trying to figure it out. There's a sense of an enormous opportunity. But boy, is this going to massively change how a lot of partners end up delivering their projects. It's going to be very, very large, and so.

所以首先我勸大家不要隨便用馬來比喻。在佩加，我們從不談論死馬。我們正在引導他們去喝水或任何類似的東西。但話說回來——保持清潔，這就是我想說的，對吧？但是——而且馬飛得很猛，所以不用擔心。合作夥伴正在努力解決這個問題。有一種巨大機會的感覺。但是，這是否會極大地改變許多合作夥伴最終交付專案的方式？它將會非常非常大，等等。

I think that by looking up with the partners on an innovation agenda, which is what we're working with, and being able to use and show them some of the tooling we have like the demo, we're able to get them excited about how they could reorient some of their efforts. Because frankly, we're in a period of a lot of discovery going on. There's no question in my mind that this is extremely real but there's also no question that the (inaudible) some of the short-term tangible benefits. And everybody kind of knows that industry going it out. term tangible benefits. And everybody kind of noticed that and just figuring it out. But boy, this is going to so radically change our technology as we go through '24. Yes, it's actually enormously exciting.

我認為，透過與合作夥伴一起尋找創新議程（這就是我們正在合作的內容），並能夠使用並向他們展示我們擁有的一些工具（例如演示），我們能夠讓他們感到興奮他們如何重新調整他們的一些努力。因為坦白說，我們正處於一個充滿發現的時期。在我看來，毫無疑問這是極其真實的，但毫無疑問的是（聽不清楚）一些短期的有形好處。每個人都知道這個行業的發展。術語有形的好處。每個人都注意到了這一點，並且正在弄清楚這一點。但天哪，當我們進入 24 世紀時，這將從根本上改變我們的技術。是的，這實際上非常令人興奮。

Our next question comes from Blair Abernethy with Rosenblatt Securities.

我們的下一個問題來自羅森布拉特證券公司的布萊爾·阿伯內西。

Ken, could you just comment on the renewal environment, given the consistent weakness in the macro or difficulty in the macro, just how did renewals trend in Q3? And what should we be expecting in Q4?

Ken，您能否簡單評論一下續訂環境，考慮到宏觀經濟持續疲軟或宏觀困難，第三季續訂趨勢如何？我們對第四季應該期待什麼？

We haven't seen any noticeable change in the likelihood of a client continuing to stay and invest and even grow in the applications that they have with Pega. So I mean, naturally, we do have clients that decide to go in a different direction. We do have clients that have transformational changes in their business. And unfortunately, Pega may not be part of that, that does happen. We're just -- it happens at every software company. But it's not something that there's been a noticeable change in 2023.

我們還沒有看到客戶繼續留在 Pega 並投資甚至發展其 Pega 應用程式的可能性發生任何明顯變化。所以我的意思是，自然地，我們確實有一些客戶決定走不同的方向。我們確實有一些客戶的業務發生了轉型。不幸的是，Pega 可能不屬於其中，但這種情況確實發生了。我們只是——每個軟體公司都會發生這種情況。但到了 2023 年，情況並沒有明顯改變。

Yes. What I made comments about the macro environment, none of them are related to the renewal environment. Our customers really were fortunate in the set of the client base that we've really been focusing on are not the SMB type businesses that are more likely to try to squeeze out their vendors. Our customers are trying to squeeze that benefit.

是的。我對宏觀環境的評論，都與更新環境無關。我們的客戶真的很幸運，我們真正關注的客戶群不是更有可能試圖擠出供應商的中小型企業。我們的客戶正在努力爭取這項利益。

Historically, when we talk about the sales cycles, Blair, for anyone else still listening, it's really focused on net new workloads is where you -- existing applications, existing projects are not -- they might be leaning more into trying to push volume to automate.

從歷史上看，當我們談論銷售週期時，布萊爾，對於仍在聽的其他人來說，它真正關注的是淨新工作負載，而現有的應用程式、現有項目則不是這樣的，他們可能更傾向於嘗試將銷量推向更高的水平。自動化。

Okay. Great. And just, Alan, just following on your commentary to be in your prepared remarks about the AI risks. Can you maybe just expand on that a little bit? You've had Infinity '23 has been in the market for a month or so here. But just what sort of -- given the nature of your banks and insurance customers, what are they looking for in terms of managing these risks? And is that -- is it scalable, I guess, when I look at the issues from a risk perspective?

好的。偉大的。艾倫，請按照您準備好的有關人工智慧風險的評論進行評論。您可以稍微擴充一下嗎？ Infinity '23 已經在市場上上市一個月左右了。但考慮到銀行和保險客戶的性質，他們在管理這些風險方面需要什麼？我想，當我從風險角度看待問題時，它是否具有可擴展性？

Well, I think we have a really good understanding of that. And I'll just tap off a couple of places that we're really working. One is to give the right people a chance to curate the output from AI before it actually gets used in a way that might be unpredictable. And we show examples of that and what we've already released. And for everything that we're going to be building over the next two release in '24 you're going to see more and more of that. The second is we understand how to really eliminate those hallucinations and being able to use both our best practices and client best practices to take the power of Generative AI, but to make it that would operate very controlled fashion.

嗯，我認為我們對此有很好的理解。我將簡單介紹幾個我們正在真正開展工作的地方。一是讓合適的人有機會在人工智慧以不可預測的方式實際使用之前對其輸出進行管理。我們展示了這方面的例子以及我們已經發布的內容。對於我們將在 24 年接下來的兩個版本中建立的所有內容，您將看到越來越多的內容。第二是我們了解如何真正消除這些幻覺，並能夠利用我們的最佳實踐和客戶的最佳實踐來利用生成式人工智慧的力量，但使其能夠運行非常受控的時尚。

I'm not sure that everybody understands how to do that, but we definitely do. And that's a lot of what we're working on making sure we're building in, so that those knobs and dials are firmly in the clients' hands. And the third is, and we've talked about this for 2 years, the whole ethical AI and bias checking capability that we have around our statistically AI. I think a lot of people with the excitement about generative AI, should not forget the importance of statistical AI, which, for example, comes from our decisioning and our process AI capabilities, and those are also super important. Those need different controls to Generative Al. And we've got -- we've already got tremendous things there as well.

我不確定每個人都明白如何做到這一點，但我們肯定明白。這就是我們正在做的很多工作，以確保我們正在建造這些旋鈕和轉盤，以便將這些旋鈕和轉盤牢牢地掌握在客戶手中。第三個是，我們已經談論這個問題兩年了，我們圍繞著統計人工智慧擁有的整個道德人工智慧和偏見檢查能力。我認為許多對生成式人工智慧感到興奮的人不應該忘記統計人工智慧的重要性，例如，統計人工智慧來自我們的決策和流程人工智慧能力，這些也非常重要。這些需要與生成人工智慧不同的控制。我們已經在那裡取得了巨大的成果。

Our next question comes from Austin Cole with (inaudible) GMP Securities.

我們的下一個問題來自 (聽不清楚) GMP 證券公司的 Austin Cole。

Just really quick, I've been looking at the AI demo that you mentioned. Where do you see this technology in 3 to 5 years and what it's doing for clients in adding value?

很快，我一直在看你提到的人工智慧演示。您認為這項技術在 3 到 5 年內會發展到什麼程度？它會為客戶帶來哪些增值？

Yes. So what it's going to do actually well before 3 years, is it's going to make it possible for us to take the knowledge of the Internet, the clients' best practices as they've identified and documented it, the Pega best practices as our experts have drawn on our experience with multiple clients and the information in their Pegasystems themselves so that they're able to use their own information and configurations and put those things together in a way that is candidly completely different than you would have to approach this a year ago.

是的。因此，在 3 年前，它的實際作用是讓我們能夠利用網路知識、客戶識別和記錄的最佳實踐、Pega 最佳實踐作為我們的專家借鑒了我們與多個客戶合作的經驗以及他們的Pegasystems本身的信息，以便他們能夠使用自己的信息和配置，並以一種與您今年所採用的方式完全不同的方式將這些東西組合在一起前。

So it's going to really drive much, much greater iteration in our clients operate with their customers, and it's really going to help customers build for change, which, of course, is our grand promise.

因此，這將真正推動我們的客戶與他們的客戶合作進行更大、更大的迭代，並且真正幫助客戶建立變革，這當然是我們的宏偉承諾。

Thank you. And let me thank everyone we've run a few minutes over here. We're very excited about both where we are and what we're going to be able to do going forward. And I look forward to talking to all of you very soon. Thank you very much.

謝謝。讓我感謝我們在這裡跑了幾分鐘的所有人。我們對我們現在的處境和未來能夠做的事情感到非常興奮。我期待很快與大家交談。非常感謝。

This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation, and have a great day.

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，祝您有美好的一天。