Pegasystems Inc (PEGA)

Working capital turnover

Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020
Revenue (ttm) US$ in thousands 1,642,666 1,497,180 1,480,583 1,490,176 1,437,291 1,432,616 1,354,853 1,290,941 1,267,010 1,317,845 1,237,559 1,223,096 1,274,461 1,211,653 1,194,069 1,163,752 1,065,425 1,017,517 995,459 986,211
Total current assets US$ in thousands 846,492 1,333,700 1,119,080 1,071,660 1,059,590 1,029,030 776,490 737,511 795,728 846,478 660,241 740,207 803,813 840,218 828,886 910,229 922,153 1,001,430 904,210 969,939
Total current liabilities US$ in thousands 609,136 1,086,060 1,024,540 1,016,570 1,044,280 577,059 472,781 461,112 474,964 538,940 413,972 435,451 435,015 485,404 400,426 430,244 404,450 415,138 356,322 356,097
Working capital turnover 6.92 6.05 15.66 27.05 93.88 3.17 4.46 4.67 3.95 4.29 5.03 4.01 3.46 3.41 2.79 2.42 2.06 1.74 1.82 1.61

March 31, 2025 calculation

Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $1,642,666K ÷ ($846,492K – $609,136K)
= 6.92

The analysis of Pegasystems Inc.’s working capital turnover ratio over the provided period reveals a generally upward trend from mid-2020 through late 2022, followed by notable volatility and a dramatic increase in early 2024.

Initially, from June 30, 2020, to June 30, 2022, the ratio demonstrated a steady increase, rising from 1.61 to 4.01. This indicates an improvement in the company's efficiency in generating revenue relative to its working capital, suggesting that the firm was progressively optimizing its short-term asset and liability management during this period. Such an upward trend typically signifies enhanced operational efficiency and potentially better utilization of working capital to support revenue generation.

The period from September 30, 2022, to December 31, 2023, shows a decline, with the ratio decreasing from 5.03 to 3.17. This downward movement could reflect a period where the company’s working capital efficiency was somewhat diminished, possibly due to increased working capital levels, reduced sales efficiency, or shifts in operational strategies.

However, the most striking feature appears in the early forecasted data for 2024, with ratios spiking dramatically to 93.88 on March 31, 2024. Such an anomalously high number typically indicates a significant anomaly, data error, or extraordinary accounting adjustments rather than a real operational change. Following this spike, the ratio decreases sharply to 27.05 by June 30, 2024, and then continues to decline through September and December, reaching 6.05 and 6.92 respectively, suggesting a normalization of efficiency metrics closer to historical levels.

Overall, the pattern indicates a period of escalating efficiency from mid-2020 through mid-2022, followed by fluctuations and a presumably anomalous spike in early 2024, after which the working capital turnover stabilizes at a more conventional level. These trends could reflect changes in operational dynamics, strategic shifts, or accounting practices, but the extraordinary ratios in early 2024 warrant closer examination for accuracy and context.