Pegasystems Inc (PEGA)

Cash conversion cycle

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
Days of inventory on hand (DOH) days — — — — 0.75 — — — — — — — — 13.60 — — — — — —
Days of sales outstanding (DSO) days 94.42 131.64 93.32 89.25 99.21 142.32 108.21 117.81 125.22 70.67 102.18 121.70 117.14 55.04 117.14 126.30 132.90 192.37 127.15 140.62
Number of days of payables days 15.24 5.81 19.33 16.16 6.17 10.88 19.72 8.12 12.12 18.02 13.69 22.21 19.87 16.58 28.48 26.02 28.41 28.21 23.94 21.37
Cash conversion cycle days 79.18 125.83 73.99 73.09 93.79 131.44 88.49 109.69 113.10 52.65 88.49 99.49 97.26 52.06 88.66 100.28 104.49 164.16 103.21 119.25

March 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 94.42 – 15.24
= 79.18

The analysis of Pegasystems Inc.'s cash conversion cycle (CCC) from the provided data indicates notable fluctuations over the analyzed periods, reflecting variations in operational efficiency and financial management practices.

Starting with the period ending June 30, 2020, the CCC was approximately 119.25 days. This period was followed by a reduction to 103.21 days by September 30, 2020, suggesting an improvement in cash flow management, potentially due to faster collection of receivables or extended supplier payment terms. However, the cycle then increased sharply to 164.16 days by December 31, 2020, indicating a decline in efficiency or disruptions in cash flow management during that quarter.

The subsequent periods show some oscillation, with the CCC decreasing to around 100.28 days by June 30, 2021, and further to 88.66 days by September 30, 2021. A significant decline is observed by December 31, 2021, when the cycle shortens to approximately 52.06 days, marking a period of enhanced operational efficiency, possibly resulting from expedited collections or better inventory management.

In the following quarters, the CCC fluctuated, reaching 97.26 days by March 2022, and stabilizing around 99.49 days by June 30, 2022. A slight decrease is noted in September 2022 to 88.49 days, with further decline to 52.65 days by December 31, 2022. This trend indicates periodic improvements in cash cycle management, though some variability persisted.

Moving into 2023, the CCC increased to 113.10 days by March and then modestly decreased to 109.69 days by June. A subsequent decrease to 88.49 days in September was observed before an increase to 131.44 days at year's end, suggesting a temporary setback in cash flow efficiency.

In the first half of 2024, the cycle shows improvement, with values of 93.79 days in March, and a further reduction to 73.09 days by June. This downward trend continued into September, with the cycle at 73.99 days. However, a significant increase occurs by December 2024, reaching approximately 125.83 days, indicating a deterioration in cash cycle efficiency during that period. The first quarter of 2025 shows a partial recovery with a CCC of 79.18 days.

Overall, Pegasystems Inc.'s cash conversion cycle demonstrates periods of significant improvement interspersed with phases of elongation. The variability suggests that the company experienced shifts in operational efficiency, possibly influenced by changes in receivables collection times, payables management, or internal process adjustments. While the shorter cycles reflect effective management at certain points, the periods of lengthening indicate areas for potential improvement in working capital management strategies.