Alan Trefler, Pegasystems CEO: Fortt Knox Earnings

Well, John, I know there's been lots of concerns about AI and what it means to different companies in the space. And candidly, for some companies, I think those concerns are really quite justified. But for us, it's been spectacular. And it's really enabled us to change the way our products work and change the way we sell in ways that are highly distinguished and I think will continue to show us in good stead both with the terrific results we had for last year and the strong guidance we're putting forward for this year.

Yes, I'm happy to because when we think about the people worried about software and SaaS, I think the risks in this space come from two distinct ways, both of which we've got a pretty effective moat against. The first is people are worried that companies will use these fancy new tools like cloud code or code-ex tools we ourselves use to just write all the software themselves and that that will erode the need for software. And to tell you the truth, there is definitely software that will fall into that category. Our stuff though has a level of sophistication, a level of regulatory capabilities built into it that's needed. So, we feel really good that we're able to use the AI to advance our software and it won't be able to be readily attacked by people who just churn code out of systems. The other attack that people are worried about is that somehow, even major systems will end up being commoditized or even whole brands might go away. The thing that Pega has always been, I think, unique at is this philosophy we have, which is actually our trademarked tagline. It's 'Build for Change.' That's actually the trademark of the company going back 30 years. And the reason we said that is we said look, creating a system is one thing but evolving it to really meet the needs of the business, hooking it into the different backends, that's where there's a lot of sophistication, a lot of capability. And also, it's really hard. If you go to one of those automated coding systems and it vomits up tens of thousands of lines of code, which it can do and actually do pretty well, but that's not organized into workflows and that's not organized into structures that really are appropriate for you running your business. You're going to find it really hard to change and evolve those systems. And I can tell you that that's very important to our clients that they know that our workflow engine, which is at the heart still of the way we use AI, is what reflects what the business actually wants to do and how it runs. And that is unique and that I think provides us a really, really good competitive moat against people just saying hey we're just going to create this stuff with the tooling. It's a lot more sophisticated when you then need to be able to go back six months, a year later and say yeah I've got to evolve it because some part of my business changed or some regulation changed.

We do selective M&A to pull in things that we think would be complementary. But we've really hit the ground running well by providing some optionality to us and our customers as to which of these so-called foundation AI models we use. And I think that's a much, much better way to go about it than trying to buy or build one of those things ourselves. And making a lot of use of something called a vector database, which is a way that you use AI technology to organize data so it can then be better used by the various LLMs. I think if you look at Blueprint, which has absolutely lit our business on fire in 2025, Blueprint is free. It's on pega.com and it is I think probably the most sophisticated use of business AI that I have seen to this day and it is driving our business and our growth.