Why Pegasystems Stock Dropped After Earnings

Pegasystems stock fell 3.6% after missing Q3 earnings expectations, with EPS of $0.35 (non-GAAP) versus analyst forecast of $0.49, and revenue of $393.4M below the $421.8M estimate. GAAP profits plunged 68% year-over-year despite 3% revenue growth. However, management remains optimistic about AI strategy and projects free cash flow could reach $700M+ by 2028, suggesting the stock may be undervalued at 13x FCF.