PagerDuty, Inc. (PD): Results of Operations and Financial Condition
PagerDuty, Inc. (PD) filed an SEC Form 8-K — Results of Operations and Financial Condition. PagerDuty Announces Second Quarter Fiscal 2027 Financial Results Second quarter revenue increased 1% year over year to $124 million Annual Recurring Revenue ( “ ARR ” ) grew year over year to $501 million Second quarter operating income was $10 million; non-GAAP operating income
How this was made
The 30-second read
Why it matters
The earnings release provides fresh data on revenue, profitability, and ARR, influencing valuation models.
Market read
First‑report earnings with GAAP profit and issued guidance make this a notable event for traders.
What to watch
Potential headwinds from competitive pricing pressure and macro‑economic slowdown.
Second quarter revenue increased 1% year over year to $124 million; Annual Recurring Revenue grew year over year to $501 million; second quarter operating income was $10 million and non-GAAP operating income was $30 million.
Revenue grew 0.8% year over year and ARR reached $501 million, while GAAP operating margin improved to 8.2% and free cash flow was $32.8 million. However, non-GAAP operating income and non-GAAP gross margin declined from the prior-year quarter, dollar-based net retention was 98%, and full-year revenue guidance was $491.5 million - $496.5 million.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $124,436 (in thousands) | – | 0.8% |
| Cost of revenueGAAP | 20,037 (in thousands) | – | – |
| Gross profitGAAP | $104,399 (in thousands) | – | – |
| Gross marginGAAP | 83.9% | – | – |
| Non-GAAP gross profitnon-GAAP | $105,397 (in thousands) | – | – |
| Non-GAAP gross marginnon-GAAP | 84.7% | – | – |
| Research and development expenseGAAP | 30,897 (in thousands) | – | – |
| Non-GAAP research and development expensenon-GAAP | $25,209 (in thousands) | – | – |
| Sales and marketing expenseGAAP | 38,325 (in thousands) | – | – |
| Non-GAAP sales and marketing expensenon-GAAP | $34,586 (in thousands) | – | – |
| General and administrative expenseGAAP | 24,938 (in thousands) | – | – |
| Non-GAAP general and administrative expensenon-GAAP | $16,072 (in thousands) | – | – |
| Total operating expensesGAAP | 94,160 (in thousands) | – | – |
| Income from operationsGAAP | $10,239 (in thousands) | – | – |
| Operating marginGAAP | 8.2% | – | – |
| Non-GAAP operating incomenon-GAAP | $29,530 (in thousands) | – | – |
| Non-GAAP operating marginnon-GAAP | 23.7% | – | – |
| Interest incomeGAAP | 4,101 (in thousands) | – | – |
| Interest expenseGAAP | (2,113) (in thousands) | – | – |
| Net incomeGAAP | $7,713 (in thousands) | – | – |
| Net income attributable to PagerDuty, Inc. common stockholdersGAAP | $4,726 (in thousands) | – | – |
| Non-GAAP net income attributable to PagerDuty, Inc. common stockholdersnon-GAAP | $25,645 (in thousands) | – | – |
| Net income per diluted share attributable to PagerDuty, Inc. common stockholdersGAAP | $0.06 | – | – |
| Non-GAAP net income per diluted share attributable to PagerDuty, Inc. common stockholdersnon-GAAP | $0.32 | – | – |
| Net cash provided by operating activitiesGAAP | $36,946 (in thousands) | – | – |
| Operating cash flow marginother | 29.7% | – | – |
| Free cash flownon-GAAP | $32,783 (in thousands) | – | – |
| Free cash flow marginnon-GAAP | 26.3% | – | – |
| Annual Recurring Revenueother | $501 million | – | – |
| Dollar-based net retention rateother | 98% | – | – |
| Customers with ARR over $100 thousandother | 884 | – | – |
| Total paid customersother | 15,506 | – | – |
third quarter of fiscal 2027 and full fiscal year 2027 outlook
- RevenueThird quarter of fiscal 2027: $123.0 million - $125.0 million; full fiscal year 2027: $491.5 million - $496.5 million.
- Tax rate20%
- NoteThird quarter of fiscal 2027 non-GAAP operating margin of 26.5% to 27.5%.
- NoteThird quarter of fiscal 2027 non-GAAP net income per diluted share attributable to PagerDuty, Inc. common stockholders of $0.34 - $0.36, assuming approximately 80 million diluted shares.
- NoteFull fiscal year 2027 non-GAAP operating margin of 25.0% to 26.0%.
- NoteFull fiscal year 2027 non-GAAP net income per diluted share attributable to PagerDuty, Inc. common stockholders of $1.33 - $1.37, assuming approximately 80 million diluted shares.
Capital returns
- Repurchases of common stock were $7,477 (in thousands) for the three months ended July 31, 2026.
- Repurchases of common stock were $72,933 (in thousands) for the six months ended July 31, 2026.
- Excise tax paid on repurchases of common stock was $808 (in thousands) for the three months ended July 31, 2026.
- Repayments of convertible senior notes were $57,500 (in thousands) for the three months ended July 31, 2026.
What drove it
- ARR as of July 31, 2026 was $501 million.
- The Company cited lands and expansions including Anthropic, PBC, Banco Pichincha, C.A., Coreweave, Inc., Delivery Hero SE, Kawasaki Heavy Industries, Ltd., and Palo Alto Networks, Inc.
- In Q2, major upgrades were made to the autonomous SRE agent, incident management lifecycle integration, and the Company's agentic offering for simplifying on-call shift management.
- PagerDuty announced a distribution agreement in Australia with Ingram Micro.
- Sales and marketing expense was 38,325 (in thousands), compared with 44,456 (in thousands) in the prior-year quarter.
Concerns
- Revenue increased 0.8% year over year.
- Dollar-based net retention rate was 98% as of July 31, 2026.
- Non-GAAP operating income was $29,530 (in thousands), compared with $31,407 (in thousands) in the prior-year quarter.
- Non-GAAP operating margin was 23.7%, compared with 25.4% in the prior-year quarter.
- Non-GAAP gross margin was 84.7%, compared with 86.1% in the prior-year quarter.
- Net income attributable to PagerDuty, Inc. common stockholders was $4,726 (in thousands), compared with $9,777 (in thousands) in the prior-year quarter.
What to watch
- Execution against third-quarter fiscal 2027 total revenue guidance of $123.0 million - $125.0 million.
- Execution against third-quarter fiscal 2027 non-GAAP operating margin guidance of 26.5% to 27.5%.
- Dollar-based net retention rate and expansion activity among paid customers and customers with ARR over $100 thousand.
- The impact of autonomous SRE, incident management lifecycle, and agentic offering upgrades on growth.
- The impact of the Australia distribution agreement with Ingram Micro.
- The transition to John DiLullo as Chief Executive Officer and Eric Prengel as Chief Financial Officer.
Balance sheet and cash flow
- Cash, cash equivalents, and investments were $470.0 million as of July 31, 2026.
- Cash and cash equivalents were $233,651 (in thousands) as of July 31, 2026.
- Investments were $236,392 (in thousands) as of July 31, 2026.
- Convertible senior notes, net, non-current were $396,930 (in thousands) as of July 31, 2026.
- Total assets were $958,319 (in thousands) as of July 31, 2026.
- Total liabilities were $711,415 (in thousands) as of July 31, 2026.
- Total stockholders’ equity was $231,961 (in thousands) as of July 31, 2026.
- Net cash used in investing activities was $(5,637) (in thousands) for the three months ended July 31, 2026.
- Net cash used in financing activities was $(6,522) (in thousands) for the three months ended July 31, 2026.
Analysis
PagerDuty reported $124,436 (in thousands) of second-quarter fiscal 2027 revenue, up 0.8% year over year from $123,411 (in thousands). ARR was $501 million as of July 31, 2026, and the company reported 884 customers with ARR over $100 thousand and 15,506 total paid customers. Dollar-based net retention was 98%, an operating indicator that bears on the durability of growth and expansion within the installed base.
Profitability improved on a GAAP operating basis. Income from operations was $10,239 (in thousands), compared with $3,566 (in thousands) in the prior-year quarter, and operating margin was 8.2%, compared with 2.9%. The company reported net income of $7,713 (in thousands) and net income attributable to PagerDuty, Inc. common stockholders of $4,726 (in thousands). GAAP diluted earnings per share were $0.06, compared with $0.10 in the prior-year quarter.
The adjusted profitability comparison was less favorable. Non-GAAP operating income was $29,530 (in thousands), compared with $31,407 (in thousands), while non-GAAP operating margin was 23.7%, compared with 25.4%. Non-GAAP gross margin was 84.7%, compared with 86.1%. Sales and marketing expense declined to 38,325 (in thousands) from 44,456 (in thousands), while general and administrative expense declined to 24,938 (in thousands) from 25,491 (in thousands). The reconciliation also included $3,303 (in thousands) of executive transition costs in the quarter.
Cash generation strengthened. Net cash provided by operating activities was $36,946 (in thousands), compared with $33,974 (in thousands), and free cash flow was $32,783 (in thousands), compared with $30,207 (in thousands). Cash, cash equivalents, and investments were $470.0 million as of July 31, 2026. During the quarter, the company repurchased $7,477 (in thousands) of common stock and repaid $57,500 (in thousands) of convertible senior notes.
For the third quarter, PagerDuty expects total revenue of $123.0 million - $125.0 million, non-GAAP operating margin of 26.5% to 27.5%, and non-GAAP diluted EPS of $0.34 - $0.36. Full fiscal year 2027 guidance calls for revenue of $491.5 million - $496.5 million, non-GAAP operating margin of 25.0% to 26.0%, and non-GAAP diluted EPS of $1.33 - $1.37. The release did not provide GAAP equivalents for its prospective non-GAAP operating-margin or non-GAAP EPS outlook.
Management, verbatim
We delivered revenue above the high end of our guidance range, crossed $500 million in ARR, and generated $33 million in free cash flow this quarter, providing encouraging signals that our strategy is gaining traction.
John DiLullo, CEO
Just as importantly, the underlying fundamentals are strengthening. Non-GAAP operating income also came in ahead of expectations and we enjoyed our fifth consecutive quarter of GAAP profitability.
John DiLullo, CEO
Not in the filing
stated, not guessed- Prior outlook was not provided, so comparison of reported results with prior guidance is unavailable.
- Segment revenue and segment profitability were not reported.
- Prior-quarter comparisons for the reported income-statement, cash-flow, and operational metrics were not reported.
- A GAAP operating-margin outlook and GAAP net income per share outlook were not provided.
- Dividend information was not reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
PagerDuty filed an SEC Form 8‑K announcing its Q2 FY2027 results and forward‑looking guidance.
Ticker impact
PagerDuty reported Q2 FY2027 revenue of $124.4M and issued guidance for Q3 revenue of $123.0M-$125.0M.
Potential modest price increase as investors digest profitability and outlook.
First‑report earnings with GAAP profit and higher‑than‑expected revenue provide fresh, material information for a mid‑cap stock.
Market effects
Positive signal for the cloud‑operations software sector.
U.S. tech market may see slight uplift.
Limited to investors tracking AI‑enabled SaaS firms.
Counterpoint
Some analysts may question sustainability of profit margins given modest revenue growth.
Key entities
- CompanyPagerDuty, Inc.
Provider of AI‑first operations management software.
- ExecutiveJohn DiLullo
CEO of PagerDuty who commented on the results.
