Pegasystems Inc (PEGA)
Return on total capital
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 286,908 | 146,161 | 145,768 | 153,553 | 101,527 | 101,330 | -24,164 | -102,361 | -162,114 | -154,623 | -234,316 | -233,304 | -133,934 | -150,173 | -106,479 | -61,279 | -86,034 | -106,703 | -74,534 | -100,268 |
| Long-term debt | US$ in thousands | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| 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 |
| Return on total capital | 46.94% | 24.96% | 30.82% | 35.27% | 26.02% | 28.64% | -14.41% | -70.40% | -104.93% | -118.17% | -360.70% | -174.40% | -32.93% | -36.09% | -23.17% | -11.73% | -17.96% | -19.68% | -14.08% | -18.02% |
March 31, 2025 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $286,908K ÷ ($—K + $611,269K)
= 46.94%
The analysis of Pegasystems Inc.'s return on total capital (ROTC) over the observed period reveals a significant trajectory of volatility and eventual recovery. Initially, the company's ROTC was markedly negative, indicating substantial challenges in generating returns relative to its total capital base. As of June 30, 2020, the ROTC stood at -18.02%, with the metric fluctuating further into negative territory through subsequent quarters. Notably, in September 2020, the ROTC improved to -14.08%, but it deteriorated again, reaching -19.68% at year-end 2020 and dipping further into negative territory in 2021 and 2022, with the lowest points observed in September 2022 at -360.70% and December 2022 at -118.17%. These extreme negative values suggest periods of severe difficulty in generating returns on the company's overall capital, possibly due to operational losses, strategic challenges, or substantial investments not yet translating into profit.
The persistent negative ROTC figures through the first half of 2023 indicate ongoing struggles in achieving profitable utilization of total capital. However, a notable trend shift begins in the latter part of 2023 and into early 2024. By December 31, 2023, the ROTC emerges positive at 28.64%, signifying a transition towards profitability and improved efficiency in capital deployment. The subsequent quarters show a continued upward trend, with the ROTC reaching 26.02% in March 2024, 35.27% in June 2024, and maintaining a positive trajectory through September 2024 at 30.82%. As of December 2024, the ROTC remains robust at 24.96%, and by March 2025, it further increases to 46.94%.
This pattern indicates a substantial turnaround in Pegasystems Inc.'s capacity to generate returns from its total capital. The progression from deep negative figures to sustained positive returns signifies improved operational efficiency, profitability, and possibly successful strategic initiatives. The shift towards positive ROTC metrics reflects enhanced management performance, better market positioning, or capital utilization efficiency that aligns with sustained profitability in the most recent periods.
Peer comparison
Mar 31, 2025