PEGASYSTEMS INCPEGA

PEGASYSTEMS INC Earnings Per Share Disclosure

10-KFiled Feb 10, 20262 min read
19. EARNINGS PER SHARE
Basic earnings per share is calculated using the weighted-average number of common shares outstanding during the period. Diluted earnings per share is calculated using the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding stock options, RSUs, and Notes.
Calculation of earnings per share:
(in thousands, except per share amounts) (1)
202520242023
Net income$393,437 $99,189 $67,808 
Weighted-average common shares outstanding170,782 170,530 166,324 
Earnings per share, basic$2.30 $0.58 $0.41 
Net income$393,437 $99,189 $67,808 
Notes - interest expense, net of tax742 (76)(5,528)
Numerator for diluted EPS $394,179 $99,113 $62,280 
Weighted-average effect of dilutive securities:
Notes1,196 428 470 
Stock options9,362 5,420 1,588 
RSUs3,450 2,890 1,446 
Effect of dilutive securities14,008 8,738 3,504 
Weighted-average common shares outstanding, assuming dilution (2) (3) (4)
184,790 179,268 169,828 
Earnings per share, diluted$2.13 $0.55 $0.37 
Outstanding anti-dilutive stock options and RSUs (5)
212 296 500 
(1) The number of shares and per share amounts have been recast for all prior periods presented to reflect the effect of the Company’s Stock Split effected in the form of a stock dividend distributed on June 20, 2025.
(2) All dilutive securities are excluded when their inclusion would be anti-dilutive.
(3) The weighted-average shares underlying the conversion options in the Company’s Notes are included using the if-converted method, if dilutive in the period.
(4) The Company’s Capped Call Transactions represented the equivalent number of shares of the Company’s common stock (representing the number of shares for which the Notes were convertible). The Capped Call Transactions are excluded from weighted-average common shares outstanding, assuming dilution, in all periods as their effect would be anti-dilutive.
(5) Outstanding stock options and RSUs that were anti-dilutive under the treasury stock method in the period were excluded from the computation of diluted earnings per share. These awards may be dilutive in the future.

About Earnings Per Share Disclosures

The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.

Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.

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