Pegasystems Inc. (PEGA) Earnings Call Transcript & Summary

All right. Great. Hi, everybody. So I'm Pat Walravens at JMP. And we have a real treat today, which is for our keynote here, we're going to have a fireside chat with Alan Trefler. Alan is the founder and the CEO of Pegasystems. And Alan, welcome.

Thank you, Pat. I always like to say founder and still CEO because they can't take founder away from you. But it's been a long time, I guess, I should be...

It has been a long time. How long has it been?

It's been 36 years.

36. And I meant to look it up and I didn't do it. Do you know -- is that the record for a public company CEO continuously serving in the CEO role and still CEO? Like Larry Ellison is older but he moved out of the CEO role, right?

Yes. I think -- I'm not sure exactly when he did. I've got to be up there is the way that I figured.

All right. So here's our plan for today. We're going to go until about 9:40 Pacific time so we have plenty of time to chat. We're basically going to divide the discussion into 3 parts: part 1 is going to be -- Alan is going to take us through his youth, his experience as a child prodigy in chess, the founding of Pegasystems, that will be part 1; part 2 is there are 3 questions that I'm asking every 1 of the 20 companies where I'm hosting the chats over these 2 days. Those questions are: number one, how's business? Number two, if there's something that you -- is there something that you tried for the first time in 2020 that worked really well? And if so, what was it? And then number 3 is, is this company, long term, a work-from-home company? And then we'll -- part 3 will be -- we will actually discuss questions that investors have had about Pegasystems today based on their last earnings call. And for those, if anyone -- actually all the way through, if you have any questions, feel free to just type it in the chat bar and we will address it as we go along.

All right. So Alan, let's go back to the beginning. Where are you from? Where were you born? What was your family like?

So I was born in Jamaica Plain. That was where I lived for the first 6 months. And ever since then, other than when I went off to New Hampshire for college, I've lived in Brookline, Massachusetts, adjacent to where Pega's headquarters have historically been in Cambridge. And not in the same house but not really that far away. By the way, my trustee CFO, Ken Stillwell, has snapped in that in fact, by his record-keeping, I am the longest tenured founder CEO. So...

Yay. All right, well. Ken, wherever you are, thank you for that. I mean, that's incredible. It's incredible. What a great subject for a keynote in a technology conference. All right. So what's Brookline like? And where did you go to high school?

So I went to Brookline High. My parents believed in public education, and we couldn't have afforded anything else anyway. And it was an interesting experience. I really didn't like high school much and was quite happy to get out of there, to tell you the truth.

Yes. And so what year did you graduate from high school?

This would have been -- I would have graduated in '72, '73.

'72 to '73. Okay. And so presumably, because you must be pretty smart because you founded a tech company and have been the longest-serving public tech company CEO, presumably, you did well in school, you got good grades.

No, I was pretty dreadful in high school. I -- let's just say, I was one of those students who was viewed as having high potential but not very into the academics as it were and certainly not into the discipline of the teachers. I actually managed to get final grades of D 2 years in French, and then I updated my junior and senior year to C. And I think a lot of that had to do with just not wanting to be there.

Yes. Did you -- were you acing other things, though, like in math and...

I was really good. I was thrown out of advanced placement math for playing blindfold chess in the back of the room with another guy, so we got dumped. As a result, I missed trigonometry. Classes didn't line up, so I've only had a theoretical view of trigonometry, not that, that has really influenced my life in any meaning. And I was -- I did have very strong grades in writing, for example, and...

In writing?

Yes. Yes.

Yes. All right. So let's go to the blindfold chess in the back of the math room. What does that mean?

Well, blindfold chess and -- is being able to play chess without a chessboard. So you basically just tell each other the moves and you imagine the board. And there are some very skilled players who can actually do this with up to 50 boards.

That's crazy.

Which just Is not. So I could do it in my prime at like 5 or 6 concurrent boards blindfold.

So you can be sitting in a room with 5 other people, and they tell you a move and then you're envisioning the chessboard in your head and you have your response and you're able to keep track of all that.

Yes. And you're faced away from them. So you're in the same room, they each have an actual board they're playing. There's typically a sponsor, a moderator to make sure everything is legal. And you envision the board. And as I said, some people can do staggering numbers. I was always happy with being able to do 5.

That's unbelievable. All right, so let's talk about chess. So for anyone in the audience who doesn't know, Alan was a chest prodigy, which interestingly is cooler now than I think it's ever been. Thanks, Queen's Gambit.

Certainly as a high school student, no one would describe it as cool.

No, no, back then. They absolutely do now. It's the funniest thing. I have a 13-year-old and a 17-year-old.

So I think it got a big push with Queen's Gambit.

Right. It's definitely cool. It's funny. If you go into Coco's room, the 17-year-old, she'll be on her Zoom, she'll be doing her nails. She'll be having a FaceTime going on her phone with all her friends, and there's a chess game going either with her brother on her phone or actually an actual board setup. So when did you start playing chess?

When I was like 5 or 6, my dad taught me. He came over from Europe after World War II. So I was, on that side, a first-generation American. On my mother's side, her parents have come over. And the -- one of the things he liked to do in the old country was play chess. So I would watch him play with friends and he taught me the moves. Not all the moves, as it turns out, but he taught me the moves and that's when I began to play. And he used to crush me. But eventually, that table turned.

Yes. And so how did your chess career develop? If you're playing at that age 6 or 7, when do you actually start like reading books and learning?

So when I was like 12 or 13, we went to a chess tournament. I've never been to one before. And so it was what's called 5 rounds, you play 5 games. And I lost the first 4, which was really very, very humbling. And then the fifth, I was winning. But then I made a blunder and lost, and it turns out the reason I made the blunder is there's a move in chess called en passant, which means in passing, which is a special way to capture a pawn. I didn't realize that, that move existed. And so as soon as I got through that loss, immediately went out, bought a book...

So you didn't realize -- hold on, this is going too fast. So you didn't realize the move existed. Your opponent does the move and so what's your reaction?

Well, my reaction was, that's not legal. And the tournament director came over and said, oh, yes, it is. And he said, you probably want to read a book. So I did. Turns out, I knew 99% of the moves, just not that one. And began sort of studying and playing and trying to understand how masters play and how to think about the positions, which is a lot of what chess is.

Yes. And what was your -- you were the New England junior chess champion, right?

Well, that was a couple of years later. So I advanced pretty quickly and I set some goals about: one, to be able to play at a certain level. And by the time I got to be a junior in high school, I was sort of the dominant high school player in Massachusetts and New England. And it was fun. I enjoyed it. It was good to be accomplished in something that -- the thing that's wonderful about chess, which is really interesting as you think about parallels to business is it's a completely disclosed game, right? It's not like other games of skill like poker and others where you don't see things. Everybody can see the same facts and factors. It's just, how do you plan it, how do you apply, how do you execute?

You got another one of those for us? It's a completely disclosed game. What else you got between chess and business?

Between chess and business. Well, yes, I've been asked how I think about whether chess influences the way I think about business. And in fact, I do use a common thought process. There's kind of a 3-stage process from my point of view in terms of making a good business decision. The first stage is you want to do pattern recognition. You're looking at a business situation, you're looking at the board and saying, what about this is familiar? What about this seems to be suggesting that there's an opportunity here or a risk in another place? And the second stage is that having identified a series of patterns, you then, on each of them, want to go and do sort of if-that-else analysis. Well, if I did this, they might come here. If I open this market or introduce this product feature, it will upset these competitors and we might get these partners. So you go through that sort of analysis. And then right before making a decision, I always think, you want to step back because you can fall in love with your own plans. And at sort of the stage 3 is to ask, what am I missing? I might be doing all these wonderful things but leaving my back rank open for somebody to come down with a rook and checkmate you out of the blue. And so you always want to look for what are the unanticipated gaps that might exist in a particular position or decision. And I find that's just a very healthy way to think about patterns for innovation, logic and then anticipation of things that might go wrong.

Yes. That last one is why I'm such a lousy chess player. I get so wrapped up in my strategy. I'm like moving -- I'm like thinking 4 moves ahead for what I'm focused on and then I totally miss something and I lose.

Well, the fact is there's lots of stuff waiting to kill you out there, both in the chessboard and in business. We want to make sure you're keeping an eye open for those.

Got it. And then I also give up too soon. Like when I realized I just blew it and I just lost my queen, I just want to resign. And my daughter is like, dad, that's such bad manners. You got to keep playing it out. Is that [indiscernible]? Is she right about that? Or does she -- she just wants the thrill of really putting me through the pain.

Well, I think for your daughter, you should give her some of that. But in general, I think it's fair game to not play out the last 10 minutes or the fourth quarter when you know the thing is hopeless. That's like one of the differences between chess and some of the other sports.

Yes. All right. Great. So you come out of high school. It sounds like you wouldn't have been able to get into any decent colleges, given your background. What ended up happening?

Well, my -- in addition to my lousy academics, apparently, my essays were pretty good. I was an editor of the school paper. I was the New England junior chess champion. I had lots of other stuff that I did. My exams were really quite positive. And I applied to lots of schools because I was scared to death that I wouldn't get in anywhere. But it turned out okay and I was able to get into a bunch. And it also led to, I think, both intellectual advancement and advancement in chess as well.

Yes. You ended up going to Dartmouth, right?

Yes. Yes.

And you studied what?

Well, when I went there, they weren't sure computers were really going to catch on. So you -- even though Dartmouth was very, very advanced in terms of computing, the president of Dartmouth was a guy named John Kemeny, who was brilliant and one of the inventors of the basic computer language, so it was very heavily influenced by computers. But to be able to study computers, I had to do economics modified with computer science because there was not enough class work available to do a full and dedicated computer science education. So I learned lots of stuff about economics that are now obsolete. And through chess, ended up learning a lot about technology because I was -- after I won a major tournament, I was recruited to be part of the program to teach computers to play chess.

I didn't -- you didn't tell me that in our prep. So what was that?

Well, Dartmouth, as being one of the universities into computers, was trying to see if computers could be taught to play chess. And remember, the machines we're on were a tiny fraction of the power of what we take for granted today. And so you really needed to do it differently than you might do it now but it still was considered a form of artificial intelligence, which is not a word I love, even though we sell a lot of it because I think there's a lot of confusion in that space. But that pulled me into it and how do you get a computer to think like a chess master, which is the way we did it at that time.

And what a chess master does is pattern recognition, right? Is that what you're trying to get the relatively limited -- well, I don't know, you tell me. How does a chess master think? And what were you trying to do? Yes.

Well, it really works according to those first 2 steps that I mentioned. What are the patterns so you can focus? And then what are the choices and how do you continually reevaluate the position so that you're anticipating the outcomes and whether if you go down a certain path, you'll win or lose? The computer usually doesn't do that step 3 to say, what am I missing? Kind of does it as it goes along. So...

Yes. All right. And so then you graduate -- and I mean, this is like 1970 -- late '70s, right? You graduate. What did you do before -- what's your first couple of jobs out of college?

Well, when I graduated in '77, my father had, had a stroke. And he was running the family business, which, by the way, is in its 100th year today or this...

Today?

Not actually today, this year. So its 100th year.

That's incredible. What's the business that's been around for 100 years?

Well, it obviously started in Poland and my father brought it over. It's the repair of porcelain furniture collectibles for collectors in museums. And we, to this day, have Trefler's restoration located here in Newton, Massachusetts. And it is more than a dozen of some of the finest artisans who know how to take -- you ever break anything, just send it our way, we'll go and make sure it gets put into tiptop shape again.

The fine art of restoring your favorite things.

That's the company vision there as it is.

I love it.

Look, it's a hard business. I mean, my father worked with his hands, never graduated high school but still was able to support a family, build a successful life, put 2 kids through college and had a real, I think, work ethic in a real sense of quality that run very deeply in both me and my brother.

Yes. And so what were you doing right after college? Did you -- you took over [ Treflers ]?

Because he had a stroke, he was not -- the physical setup that he was in, he was a little bit shaky and it wasn't easy for him to walk around as much. It was a little too cramped. So we -- rented is my first introduction to real estate. We rented a new place for him, set him up, moved him, got that all set out. And then after about 6 or 8 months, I went into industry as a systems integrator, as a consultant working for large companies to try to help them improve the technology and make better use of computers.

Yes. And for our audiences, like when is Pat going to get to the point? Believe it or not, we're there, right? So you -- initially, you were doing work for Citibank, right? Is my -- am I remembering the bank right?

Yes, Citi was one of our first major customers and actually one where I had a very, very large amount of experience. I was working for a systems integrator but I spent 50 weeks, 1 year at 111 Wall Street trying to help them modernize their systems in that era.

Yes. And what did that mean back then?

Well, so there were some real innovators at Citi who thought that it should be possible to take lots of things that a bank did and design them into the computer systems themselves. So there would be faster outcomes, less manual handoffs, automation, being able to get greater consistency on a global footprint, a lot of the things, frankly, that organizations are still trying.

I know. That's what I find so fascinating about it, right? And 40 years later, it's the same themes.

It's actually an embarrassment. I think that the technology industry is a shame because the idea I got when I was at Citi and then after I went to work for another company and learned some more things, et cetera, led to the genesis of Pega. The idea was that the way we write software is really stupid because people who don't understand how the technology works write down what they want, which may or may not be sensible, pass it off to teams like mine. We would do things called functional and technical decomposition, and then we would type strange languages into text trials and compile them. And I said to myself, I said, look, it's the '80s. Computers are getting faster. You have industries like manufacturing where they have computer-aided design and computer-aided manufacturing. Why can't we apply those principles to the writing of software itself so that we can bring the business people and the technologists together. They can collaborate on what they want the technology can do. And that they can model, they can create a model of what they want to show the customer, what they want to do in the back end systems, all the different steps in the middle. And from that model, we should be able to automate the very writing of software. So we call it sometimes software that writes software. And it turned out that this was a little trickier than I might have envisioned, so it took a while to get it really working. But I'll tell you that today, this style of what sometimes people call low-code development or model-based development is a revolutionary way for people to create systems big and small.

Yes. So you started Pega in 1984 -- '83?

Started in '83.

'83. And why the name Pegasystems?

Well, I was looking for something that wasn't initials or wasn't a person's name. And we kind of liked the idea of this elegant flying horse being able to clean up the mess that was the front office, the customer engagement and the back offices of our customers. If you want, I can give a little lesson in Greek mythology that goes into a little more...

Yes, give us the short version. So?

So the short version is, if you know how Pegasus, the flying horse, was born, what basically happened is there was a horrible evil creature named Medusa with snakes for hair, who got her head lopped off. And from her blood, as the head hit the ground, sprang Pegasus, which was this elegant, well-natured, very, very loyal to the gods sort of creature.

Wait. Like Hercules killed her, right?

No, Perseus.

Oh, Perseus. Okay. So Perseus killed her and a horse comes out of her blood?

Well, when her head hits the floor, out pops the horse from her blood. And the message we thought the Greeks were sending was that even in the most evil of creatures or situations, perhaps there is a little drop of good. And we like the image of the snakes for her hair being an analogue to the traditional way of writing software and the traditional way the computers were used. So we were going to swing forward and then fly off and do better. That's the -- but it also led to a cool logo so that helped, too.

Yes. I love it. All right. So I think we're going to have to stop on part 1 because I'm going to use up too much of my time. So that's the part 1, we got to 1984.

I'm sorry?

We only got to 1984. Here's part 2. So part 2 is -- and I think you're my fourth one today as I've already asked 4 other CEOs or CFOs this question. I got a set of 3 questions. The first one is just how's business? What would you say, Alan?

So we're incredibly busy. We just reported our results for last year. Our annual contract value, which to us, ACV and backlog are the critical measures of the business that we are using to manage and we've been talking about. Despite this horrific environment that we've experienced like everybody else, our annual contract value grew about 20% year-on-year. And the Pega Cloud part of our business is growing well over 50%. We run on Pega Cloud, which is a fully managed Pega-provided cloud. We also have what we call Client Cloud, which is our customers take our software and run it on their choice of cloud. So we run under the coverage today on AWS. Some customers want to run on the Google Cloud platform or Microsoft Azure. And they might want to run us as part of their data center as opposed to having us be outside and separate for a variety of reasons. And our cloud business between Pega Cloud and Client Cloud is now about 95% of our license revenue. So we, over the last 2, 3 years, have done a super hard shift away from perpetual, which is what we sold a lot of. We did sell cloud and term licenses, too. But I would say in the last 24 to 36 months, we did a hard shift away and are basically hoping to take the perpetual business down to almost nothing and going to market entirely with, Pega Cloud or if you've got a good reason for wanting to put it behind your firewall, Client Cloud.

And your ACV growth, I think, was -- last quarter was 21%, 22% the quarter before that. How should we think about ACV growth over the next couple of years?

Well, we've been able to grow at that rate for the last 2 or 3 years. I've recently -- in the last 6, 8 months, we've brought on a lot of very, very significant talent. If you were to take a look at LinkedIn and see about senior executives leaving other companies like Salesforce, Microsoft, you'll see some very, very talented people who are excited about the way our technology works compared to our competition, have left those companies to join us in really key positions. So I think, though, it will be a lot of work, we have the potential to grow this business faster. And I don't believe just necessarily for the sake of growth, I think we have a lot to offer to this market, and we will offer it best if we can figure out how to accelerate over the next couple of years.

Yes. What do you think a sustainable growth rate is for you guys, if you look at it on a long-term basis?

Well, it's -- I'm leery to make projections. And I'll say that under my leadership, when I was basically hands on, on the sales organization, my ability and limit of growth in terms of managing that was the 20% ACV, for which we had 3 pretty consistent years. With this infusion of talent, I see other companies that are growing in the 30s. In some cases, more. And it's going to be work and it's going to -- it requires changes to a lot of things in the firm to be able to do it. But I don't see any fundamental impediment to us being able to knock the growth rate up as we continue to bring talent in, as we continue to really get our cloud shops working the way that they should and to mature that business. To be honest, I was a couple of years late to focusing on the cloud. I was a little surprised at how quickly some of the top 10 banks in the world went from saying, no customer information on cloud. We're really, really worried about that. During the course of just like 1 year, it was like a flipping of a switch. And so the companies that had bet on that, I think, got an advantage. But we've got ample evidence and ample ability to sell into customers who are already customers of our competitors and have enormous upside in the what we call the key and premier orgs that have traditionally been where we've been able to reliably grow our business at the same time we can bring on some new names.

All right. So let's talk about -- you said it's going to require some changes and then you touched on them, but let's enumerate a couple of them. What are the 2 or 3 most important changes that it's going to require? And maybe it will work, maybe it won't, but that it would require to take you up to this next level of growth?

Well, what I'm really excited about is that the new leadership that we brought in has a real commitment to what we call the SMC, the sales management cadence, which is how do you make sure there's a disciplined and consistent process to drive performance? We're also working to make our software easier for customers to buy. We did a massive shift a couple of years ago to move our sellers from thinking in terms of total contract value, which would encourage them to try to do really long deals, big complicated deals to annual contract value, which is much closer to the way that customers want to buy in this era. And we're also doing and we're going to be investing in marketing because I don't think the Pega brand, even though we've just crossed $1 billion in revenue, I don't think the Pega brand is generally well understood and well known. And so we're actually actively looking to create some greater visibility for us, which will make it easier. And I'll throw in a fourth. The leadership...

So we have the sales management cadence was one. Making it easier to buy was two. What was three?

Well, the third, and I am actually going to reorder them. The third is partners and having a real orientation for how partners can and should be used by us. We do have a little bit of services revenue but we have tens of thousands of trained and certified partner staff. We want to make them part of our selling motion as well as a delivery motion. And then the final one in this ordering is marketing and a real push on upping our visibility because historically, as I said, even though we've just crossed $1 billion, a lot of people don't know about us. We're doing things very differently now than we did 4 or 5 years ago. And so we need to get the new Pega to be seen and understood by the customer and prospect base. And so very aggressive programs in those 4 areas. And I -- we're investing, as we explained, when we put forward our guidance. And I'm extremely excited that it's going to yield potentially faster growth rates.

All right, that's super helpful, good. All right. So next one, what's something that you guys did in 2020 for the first time that worked really, really well?

Well, when just about a year ago, the curtain dropped, I was actually in Europe the second week of March and cut my trip short because they were closing the borders at the end of that week. I was -- and for the first, I'd say, 48 hours, I was pretty worried about how this transition would occur. Of course, some business stopped. Some customers became much more interested, and we can talk more about that in a second. But certain things that we used to do that were part of our sales, delivery and support cycle, were very human-to-human involved. So for example, we had a program, which we would use with clients, both prospects and customers sometimes to get them even more excited. We call Catalyst, which was a way to get a bunch of people in a room for 2 days to 2 weeks, and in that time period, we would be able to create a model and show them what working software would look like that would solve a business problem in a way that was new and different. And the...

And the Catalyst was pre the pandemic though?

Pre pandemic. And so the question was when you can no longer put a couple of Pega experts and a dozen people from different parts of the customer, you can no longer fly them into a big conference room or bring them into our offices. How do you do that? And I would tell you that as worried as I was at 48 hours, by the time we were 72 hours into it, I knew we'd be fine because the teams flipped, demonstrated that they had the agility to be able to do those sorts of interactions. And actually, in some ways, they become much easier because you don't have to fly all the people. You have to change them. You can't do full day sessions because people's head explode. But you can change it and you can really take advantage of the virtual world, in some cases, to accelerate those. The other thing that I really found was interesting is that with the pressure of the pandemic, senior executives and our customers became even more receptive to some of the messaging that we had put out in the last year, which was how organizations needed to think of themselves from the Center-out, that you can't have channel-specific code, like for the call center or the mobile device or the website, you can't have business logic in those channels. You need a decision hub, a brain that's going to make sure the same decisions get done in all those different places and that can instantly flip a new approach, a new program, a new process into the channels and have them work across the different back end systems. And this trademark center, our vision is one that is continuing to resonate extremely well as organizations think about their business architecture, not technical architecture, but how do I think about my business? And do I want my business to be chopped up by channels in the front end or chopped up by products in the back end? But I really need a brain in the middle and a process engine in the middle and case management in the middle that's able to mediate between those. And the move to the cloud actually makes that even more important because you have more endpoints that you're trying to bring together for common customer bets. So I think those messages, the ability to operate on a virtual basis like we could physically and the ability to think Center-out were both really important concepts that we grew last year and I thought were very exciting.

Right. Think Center-out and then used to call it Catalyst. What did you call the new thing? Was it basically just a virtual version of Catalyst?

We call it Catalyst.

And it's just basically just a virtual version account?

Yes. And in fact, that is now the Catalyst that we're doing.

And that's not really sales and marketing, right? That's when you've already landed the customer?

No, it's -- so I'll give you an example of something that happened last year that had never happened before, which after all these years, you wonder how many of those can there be. So we get a call on a Monday from the State of Bavaria. We've never done work with them. But somebody who had worked with us and another customer was now working there. And Germany had just gotten slammed by businesses that needed support, businesses that there was money available. But generally, you've never seen a recession like that hit overnight. And they asked us to come and do a Catalyst session, which we did in 1 day, right, because everything was on fire. The end of that day, they said, let's go do it. By that weekend, we were live and taking hundreds of thousands of business applications, separating the wheat from the chaff, finding the fraud, driving the sustainability of this business. They liked it so much, they did something that I've never seen before. They put out a press release saying how they were responding to the pandemic, this is out on the web. And they mentioned Pega by name.

This is State of Bavaria in Germany?

Yes, second largest state in Germany. They mentioned us by name, without even asking, which, of course, we loved. But normally, you have to go beg a customer to put you in a press release. This is -- they did it. And now on top of it, we're working across all of Germany based on the strength of this model-driven, high-speed but high-power set of outcomes that's already found fraud, already made sure that things are working the right way. And they're, at this point, raving fans. So being able to do Catalyst not just virtually but in 1 day, I just think that shows the resilience of our team in being able to respond to the stress.

And previously, how long did they last when you were doing them in person?

We used to do them typically 2 days to 2 weeks. But things have been both accelerated and virtualized in ways that we wouldn't have guessed.

Yes. So I had one CEO said that they went with -- they started doing a lot of digital marketing and they used to rely on events, right? And now they're going to be a lot less reliant on in-person events because they've also figured out they don't just follow up on the leads that you get from people who go to events, actually create customer profiles and figure out what the ideal customer is and market the right product to them based on what, right? That was their learning. I had another one say, we used to do, I think he said monthly employee meetings and we went down to weekly employee meetings in a virtual environment. Because we're -- now they've gotten to 2 weeks but that was his big learning. And so for you, it's this number three, the Virtual Catalyst, they go faster and they work just as well.

Yes. Though I think all companies have had to do a number of similar things. We increased our interaction with customers -- I'm sorry, with staff by doing biweekly, what we call check-in chats and just making sure we're making outreaches happen so that people can feel plugged in with -- we don't want to be distant from our staff, we're just physically distant. But emotionally, as people and as a company, we need to be close.

Right. Time is flying here, Alan, so I'm going to ask 2 more questions. One is from an investor who's listening to us and his perspective was, wow, he's been CEO that long. So under what circumstances would this business ever be sold?

Well, we're pretty committed to independence. That's more of the things that I know our clients value the thought that we're not going to get gobbled up by some bone collector. Lots of these software businesses get bought. The leadership teams either disappear or get subsumed, they lose their vision. We really want our customers to think of us as a business that could be a sustaining business. And we've been working hard to make that positive. Obviously, there have been no shortages of chances to be bought over these years.

Is that right?

Yes.

So the phone rings?

We politely decline. It's not on the agenda. And I'm lucky enough that me and the other internal managers have a sufficient equity stake that we can be pretty certain about our future.

Yes. Yes. Okay. Then last one for us to wrap up, but hopefully, it's a good wrap-up question is, so I mean, you have a lot of conversations with investors. You obviously know your business extremely well. If there's sort of 1 or 2 things that you think maybe investors don't get about Pega that are -- or maybe just don't understand as well as they might about Pega than a report, what do you think those 1 or 2 things are?

Well, I think one thing is that many investors, I think, realize that we were born and grew up as a company that operated with highly focused, very select, typically extremely large customers as our market. And I don't think people realize how committed we are to evolving that, to broadening what we do for current customers but also really opening the aperture for many more customers because there are a staggering number of additional customers that we can and we believe we should be serving. And I don't think that's well understood.

No, I don't think so either, yes.

I also don't think people fully appreciate the immaturity of some of the other offerings, some of which are getting a lot of publicity. You hear about things like robotic process automation and how you're going to drop robots everywhere and magically, businesses will become more efficient and closer to the customer. And I don't think you have to peel below the surface very far to see that a lot of that is much more imagination than anything that will be real. Don't get me wrong, we love robots. We offer robotics as a part of our solution but the robots, not the brain. This Center-out concept, I think of investors. And if you were to listen to my 16-minute keynote from last year's virtual PegaWorld in June, if you just Google Pega keynote, I think there's a pretty concise but efficient description of how our Center-out vision really has the potential to blow away what other whole submarkets can do. And I think investors would benefit from understanding that business vision, which I will tell you, I think, is compelling.

All right. Alan, this has been a treat. Thank you so much for taking 45 minutes of your day and sharing it with us. And thank you to your team for doing all the one-on-ones today. It was great to see you, and we really appreciate having you here.

Well, thanks, Pat. And I do believe that we're all going to get through this, and we're going to see a -- we're looking forward to a good coming out of the trough here, and collectively, as a society, having a great 2023. I think we all deserve it based on what the whole world has been through. So...

Cheers to that. All right. Thanks again.

Thank you very much.

Bye-bye.