Pegasystems Inc (PEGA)

Short-term

Turnover ratios

The activity ratios of Pegasystems Inc. over the period from 2020 to 2024 demonstrate notable trends and provide insights into the company's operational efficiency and liquidity management.

Inventory Turnover: There is no available data for inventory turnover across the specified years, indicating that the company either maintains negligible or no inventory or does not report this metric, which is typical for certain software or service-oriented firms that do not carry substantial physical inventories.

Receivables Turnover: The receivables turnover ratio increased from 1.90 in 2020 to a peak of 2.87 in 2021, followed by marginal fluctuations around 2.81 in 2022, decreasing slightly to 2.56 in 2023 before rising again to 2.71 in 2024. This pattern suggests that Pegasystems has maintained a relatively stable accounts receivable collection efficiency, with slight improvements and fluctuations. The increase from 2023 to 2024 indicates a modest enhancement in collection practices or shorter credit terms extended to customers.

Payables Turnover: The payables turnover ratio exhibits a significant upward trend, from 12.94 in 2020 to 62.75 in 2024. This notable increase implies that the company is paying its suppliers more frequently within the periods, or is negotiating shorter payment terms, which could reflect stronger cash flow management, improved liquidity, or strategic supplier payment practices. The sharp rise particularly between 2023 and 2024 underscores an acceleration in settling payables.

Working Capital Turnover: This ratio shows a consistent upward trend, rising from 1.74 in 2020 to 6.05 in 2024. An increasing working capital turnover indicates improved efficiency in utilizing working capital to generate revenue. The sharp growth over these years suggests that Pegasystems is becoming more effective in managing its short-term assets and liabilities to support revenue generation.

In summary, Pegasystems Inc. exhibits stable collection efficiency, as evidenced by relatively steady receivables turnover, and demonstrates significant improvements in its payables management and working capital utilization. These trends suggest enhanced operational efficiency and liquidity management, positioning the company toward more effective use of its short-term assets and liabilities over the analyzed period.

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Average number of days

The activity ratios for Pegasystems Inc., specifically focusing on the days of inventory on hand, days of sales outstanding (DSO), and days of payables, exhibit notable trends over the period from 2020 to 2024.

Regarding the days of inventory on hand, the data indicates that this metric remains unspecified ("— days") for all listed years (2020 through 2024). This suggests that inventory management is either minimal, the company maintains negligible inventory levels typical of a software or service enterprise, or that inventory is not a significant component of the company's assets, which is common in the technology sector.

The days of sales outstanding have shown significant fluctuation. In 2020, DSO was approximately 192.36 days, reflecting a relatively extended collection period. Over subsequent years, DSO decreased substantially, reaching 127.11 days in 2021 and slightly increasing again to 129.86 days in 2022. In 2023, DSO rose to 142.32 days, indicating a longer collection cycle, but then decreased to 134.79 days in 2024. These fluctuations suggest periods of improved and then slightly deteriorated receivables management. Overall, the trend indicates a decreasing DSO from the 2020 peak, implying improved collection efficiency, although the subsequent rise in 2023 indicates some challenges in receivables management during that year.

The number of days of payables shows a consistent decline over the examined period. In 2020, the company took approximately 28.21 days to pay its suppliers. This decreased markedly to 16.58 days in 2021 and remained relatively stable at 18.02 days in 2022. The trend continued with a further reduction to 10.89 days in 2023, and by 2024, the days of payables decreased sharply to 5.82 days. This progression indicates an increasingly aggressive approach to paying suppliers, which could reflect improved cash management, a desire to preserve cash flows, or possible changes in payment terms or supplier relationships.

In summary, Pegasystems Inc. demonstrates a stable management approach in terms of inventory, with no data indicating significant inventory holdings. The company has improved its receivables collection efficiency over time, although some variability exists, notably with a rise in DSO in 2023. Simultaneously, the decreasing trend in days of payables suggests a strategic emphasis on accelerating payments to suppliers or adapting to shorter payment terms. These activity ratios collectively illustrate a dynamic receivables and payables management environment within the company, aligned with typical characteristics of technology-sector companies with minimal inventory holdings.

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Long-term

The analysis of Pegasystems Inc.'s long-term activity ratios—specifically, the fixed asset turnover and the total asset turnover—over the period from 2020 to 2023 reveals several insights into the company's asset utilization efficiency.

Starting with the fixed asset turnover ratio, there was an upward trend from 9.42 in 2020 to 10.60 in 2021, indicating improved efficiency in generating revenue from fixed assets during that period. A slight decline was observed in 2022, with the ratio decreasing marginally to 10.05, yet it remained higher than the 2020 level, suggesting sustained utilization efficiency. Data for 2023 and 2024 are unavailable, making it impossible to determine the continued trend beyond 2022.

In terms of the total asset turnover ratio, the company experienced consistent growth from 0.63 in 2020 to 0.76 in 2021 and further to 0.97 in 2022. This progression signifies an increasing effectiveness in using total assets to generate revenue during this period. However, in 2023, the ratio slightly declined to 0.95, and further to 0.85 in 2024, indicating a modest erosion in overall asset utilization efficiency in the most recent years analyzed.

Overall, the data points to a pattern of enhanced asset efficiency from 2020 through 2022, with some normalization or slight decline starting in 2023. The fluctuations, particularly in the total asset turnover ratio, may be reflective of operational changes or strategic shifts impacting asset deployment efficiency. The absence of data beyond 2023 limits the ability to comment on emerging trends or future performance, but the existing figures suggest that Pegasystems Inc. experienced periods of improved asset utilization that have somewhat plateaued or decreased recently.