PagerDuty (NYSE:PD) Releases Earnings Results, Beats Expectations By $0.01 EPS

PagerDuty (NYSE:PD) announced its earnings results on Thursday. The company reported $0.32 EPS for the quarter, beating the consensus estimate of $0.31 by $0.01, FiscalAI reports. The business had revenue of $124.44 million for the quarter, compared to the consensus estimate of $123.27 million. PagerDuty had a return on equity of 18.20% and a net margin of 38.60%.The company’s revenue was up .8% on a year-over-year basis. During the same period last year, the business posted $0.30 EPS. PagerDuty updated its FY 2027 guidance to 1.330-1.370 EPS and its Q3 2027 guidance to 0.340-0.360 EPS.

Here are the key takeaways from PagerDuty’s conference call:

• PagerDuty’s ARR surpassed $500 million for the first time, reaching $501 million, while dollar-based net retention improved sequentially to 98% and customers generating more than $100,000 annually increased to 884.
• The company reported growing adoption of its usage-based Operations Cloud, which grew double digits overall in Q2, and plans to launch it as the AI-first PD Reliability Platform later this quarter with autonomous SRE capabilities available to all customers.
• PagerDuty exceeded profitability expectations, delivering a 23.7% non-GAAP operating margin and $33 million of free cash flow. Following restructuring and cost reductions, FY2027 operating-margin guidance increased to 25%-26%, with free-cash-flow margin now expected to remain in line with FY2026.
• Revenue was $124.4 million, up just 1% year over year, and full-year FY2027 revenue guidance implies approximately flat growth at the midpoint, highlighting continued top-line pressure despite improving retention and new customer activity.
• The company is reducing its workforce by approximately 15%, primarily in non-customer-facing roles, with expected restructuring charges of $5.5 million-$7.5 million and management acknowledging that the business still has work to do before stabilization is complete.

PagerDuty Stock Up 3.8%

NYSE:PD opened at $12.66 on Friday. The firm has a market capitalization of $976.26 million, a PE ratio of 6.21, a price-to-earnings-growth ratio of 3.13 and a beta of 0.93. The stock has a 50 day moving average of $10.57 and a 200-day moving average of $8.40. PagerDuty has a 52 week low of $5.70 and a 52 week high of $17.29. The company has a current ratio of 1.95, a quick ratio of 1.95 and a debt-to-equity ratio of 1.83.

PagerDuty declared that its Board of Directors has approved a share buyback plan on Thursday, May 28th that authorizes the company to repurchase $100.00 million in shares. This repurchase authorization authorizes the company to purchase up to 16.4% of its stock through open market purchases. Stock repurchase plans are typically an indication that the company’s leadership believes its stock is undervalued.

PagerDuty News Summary

Here are the key news stories impacting PagerDuty this week:

• Positive Sentiment: Q2 results exceeded expectations: PagerDuty reported adjusted earnings of $0.32 per share versus the $0.31 consensus estimate, while revenue of $124.44 million surpassed forecasts of $123.27 million. Revenue increased 0.8% year over year, and the company generated $33 million in free cash flow. PagerDuty Announces Second Quarter Fiscal 2027 Financial Results
• Positive Sentiment: Profit outlook was raised above analyst expectations: PagerDuty guided to fiscal 2027 EPS of $1.33-$1.37, compared with consensus of $1.17. Third-quarter EPS guidance of $0.34-$0.36 also exceeded the $0.31 consensus estimate. Full-year revenue guidance of $491.5-$496.5 million was broadly in line with the $493.2 million consensus, suggesting the primary upside is coming from cost control and profitability. PagerDuty forecasts Q3 FY2027 operating margin
• Positive Sentiment: Operating momentum showed some improvement: Management said annual recurring revenue surpassed $500 million, while customer growth accelerated. These metrics support the company’s strategy of expanding AI-first operations-management offerings, although overall revenue growth remains modest. PagerDuty sales and customer growth report
• Negative Sentiment: PagerDuty is cutting approximately 15% of its workforce: The restructuring could weigh on employee execution and signal continued pressure to align expenses with slower top-line growth. However, management expects the actions to help produce a third-quarter operating margin of 26.5%-27.5% and improve profitable growth. PagerDuty to cut about 15% of workforce

Analyst Ratings Changes

A number of research firms have recently issued reports on PD. Weiss Ratings upgraded shares of PagerDuty from a “sell (d+)” rating to a “hold (c-)” rating in a research note on Friday, August 21st. Truist Financial upped their target price on shares of PagerDuty from $11.00 to $13.00 and gave the company a “buy” rating in a research note on Thursday, August 20th. Canaccord Genuity Group boosted their price objective on shares of PagerDuty from $9.00 to $10.00 and gave the stock a “buy” rating in a report on Friday, May 29th. Morgan Stanley restated an “underweight” rating on shares of PagerDuty in a research note on Friday. Finally, TD Cowen reiterated a “buy” rating on shares of PagerDuty in a research note on Wednesday. Three investment analysts have rated the stock with a Buy rating, six have assigned a Hold rating and two have issued a Sell rating to the stock. According to data from MarketBeat, the stock presently has an average rating of “Hold” and a consensus price target of $12.28.

Institutional Trading of PagerDuty

Several hedge funds have recently made changes to their positions in the stock. Kestra Advisory Services LLC bought a new position in PagerDuty during the 4th quarter worth $68,000. Los Angeles Capital Management LLC bought a new stake in PagerDuty in the fourth quarter valued at $114,000. Inceptionr LLC acquired a new position in shares of PagerDuty during the fourth quarter valued at $132,000. State of Tennessee Department of Treasury acquired a new position in shares of PagerDuty during the second quarter valued at $160,000. Finally, Numerai GP LLC bought a new position in shares of PagerDuty during the fourth quarter worth about $161,000. Institutional investors own 97.26% of the company’s stock.

PagerDuty Company Profile

PagerDuty, Inc engages in the operation of a digital operations management platform in the United States and internationally. The company’s digital operations management platform collects data and digital signals from virtually any software-enabled system or device and leverage machine learning to correlate, process, and predict opportunities and issues. Its platform includes PagerDuty Incident Management that provides a real-time view across the status of a digital service while incorporating noise reduction to remove false positives; AIOps that applies machine learning to correlate and automate the identification of incidents from billions of events; Process Automation offers centralized design time and run time environment for orchestrating automated workflows that span across departments, technologies, and networks; Customer Service Operations, which is offered to orchestrate, automate, and scale responses to customer impacting issues.