Pegasystems Inc (PEGA)

Return on equity (ROE)

		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
Net income (ttm)	US$ in thousands	196,735	99,189	122,764	129,875	76,458	67,808	-40,244	-126,485	-365,977	-345,582	-417,441	-380,389	-56,802	-63,040	-21,788	15,413	-42,618	-61,373	-64,461	-75,532
Total stockholders’ equity	US$ in thousands	611,269	585,480	473,023	435,402	390,186	353,838	167,636	145,396	154,496	130,843	64,961	133,779	406,668	416,088	459,632	522,468	478,925	542,172	529,322	556,282
ROE		32.18%	16.94%	25.95%	29.83%	19.60%	19.16%	-24.01%	-86.99%	-236.88%	-264.12%	-642.60%	-284.34%	-13.97%	-15.15%	-4.74%	2.95%	-8.90%	-11.32%	-12.18%	-13.58%

March 31, 2025 calculation

ROE = Net income (ttm) ÷ Total stockholders’ equity
= $196,735K ÷ $611,269K
= 32.18%

The analysis of Pegasystems Inc.'s return on equity (ROE) from June 30, 2020 through March 31, 2025 indicates a trajectory of significant volatility with notable periods of negative and positive returns. From mid-2020 to early 2022, the company's ROE was predominantly negative, signaling challenges in generating profits relative to shareholders’ equity. Specifically, the ROE was consistently in negative territory, with the most pronounced declines occurring in late 2022, where the ROE reached extremely negative levels of -642.60% on September 30, 2022, and remained substantially negative through early 2023, although it showed some signs of narrowing.

This prolonged period of negative ROE suggests that the company was experiencing significant losses or an elevated level of financial distress, potentially due to operational challenges, restructuring, or other external factors impacting profitability. The extremely negative figures also imply that equity was being eroded or that losses outstripped shareholders’ investments, which can be indicative of financial instability or ongoing struggles to achieve profitability.

However, from the last quarter of 2023 onward, a notable transition occurs. The ROE turns positive at December 31, 2023, reaching 19.16%. This positive turn indicates an improvement in profitability and a move toward more efficient utilization of shareholders’ equity. The subsequent quarters show continued positive trends, with the ROE rising to 29.83% on June 30, 2024, and slightly adjusting downward to 25.95% on September 30, 2024, before declining somewhat to 16.94% at the end of 2024. In March 2025, the ROE further increases to 32.18%, suggesting sustained profitability and a potential stabilization in the core operations.

Overall, the firm experienced a long phase of negative ROE, indicative of operational or financial difficulties, but has demonstrated a significant turnaround starting late 2023. The transition from deeply negative figures to positive and rising ROE reflects a potential recovery, improved profitability, or strategic changes that have begun to positively influence shareholders' equity returns.