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Pegasystems (NASDAQ:PEGA) took off in early trading Wednesday, climbing more than 30% after the company crushed Q1 expectations and showed clear momentum from its AI-driven software tools.
Revenue jumped 44% year over year to $475.63 million, with a massive 195% surge in subscription license sales leading the charge. That helped the company swing to a net profit of $85.42 million, compared to a $12.12 million loss in the same period last year.
The enterprise software firm, which focuses on AI decision-making and workflow automation, saw annual contract value rise 13% to $1.445 billion. Its cloud contract value also climbed 23% to $701 million, with Pega Cloud leading much of the growth.
Cash flow was another bright spot. Operating cash flow hit $204 million and free cash flow was close behind at $202 million, both up 13% from a year ago. The company's backlog also grew 21%, signaling a healthy pipeline.
Executives credited the company's subscription model and strong product performance, saying Pegasystems is hitting key profitability metrics while still growing aggressively a balance many software investors are eager to see.
This article first appeared on GuruFocus.