Core Insights - PagerDuty reported mixed second-quarter results, with adjusted earnings of 30 cents per share, surpassing market estimates of 21 cents, while sales of $123.411 million fell short of expectations of $123.639 million [1] - The company provided third-quarter guidance for adjusted EPS between 24 cents and 25 cents, with expected sales ranging from $124 million to $126 million [1] Group 1 - PagerDuty achieved GAAP profitability in Q2 and experienced solid growth in international markets, along with customer additions exceeding last year's total [2] - The company is positioned as a key player in the emerging AI ecosystem, serving as a preferred real-time operations platform for enterprises and AI-native companies [2] - Following the earnings announcement, PagerDuty shares increased by 5.5%, reaching a trading price of $16.44 [2] Group 2 - Analysts adjusted their price targets for PagerDuty post-earnings, with Canaccord Genuity lowering its target from $21 to $19 while maintaining a Buy rating [8] - RBC Capital maintained an Outperform rating but reduced its price target from $20 to $18 [8] - Baird maintained a Neutral rating and cut its price target from $18 to $16 [8]

Core Viewpoint - PagerDuty reported quarterly earnings of $0.3 per share, exceeding the Zacks Consensus Estimate of $0.2 per share, and showing an increase from $0.21 per share a year ago, representing an earnings surprise of +50.00% [1][2] Financial Performance - The company posted revenues of $123.41 million for the quarter ended July 2025, slightly missing the Zacks Consensus Estimate by 0.15%, but up from $115.93 million year-over-year [2] - Over the last four quarters, PagerDuty has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance - PagerDuty shares have declined approximately 11.7% since the beginning of the year, contrasting with the S&P 500's gain of 9.1% [3] - The current Zacks Rank for PagerDuty is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $0.25 on revenues of $125.7 million, and for the current fiscal year, it is $0.97 on revenues of $496.92 million [7] - The trend of earnings estimate revisions for PagerDuty was mixed ahead of the earnings release, which could change following the recent report [6] Industry Context - The Internet - Software industry, to which PagerDuty belongs, is currently ranked in the top 27% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents PagerDuty's unaudited condensed consolidated financial statements for the period ended July 31, 2025, covering balance sheets, operations, comprehensive loss, equity, and cash flows, with detailed notes [Condensed Consolidated Balance Sheets (unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) Condensed Consolidated Balance Sheets (in thousands) | Metric | July 31, 2025 | January 31, 2025 | | :----------------------------------- | :------------ | :--------------- | | **Assets** | | | | Total current assets | $671,748 | $711,720 | | Total assets | $891,531 | $927,266 | | **Liabilities & Equity** | | | | Total current liabilities | $281,141 | $369,158 | | Total liabilities | $693,850 | $779,221 | | Total stockholders' equity | $180,709 | $129,828 | - Total assets decreased from **$927.3 million** as of January 31, 2025, to **$891.5 million** as of July 31, 2025[15](index=15&type=chunk) - Total liabilities decreased from **$779.2 million** to **$693.9 million**, primarily due to the repayment of current convertible senior notes[15](index=15&type=chunk) - Total stockholders' equity increased from **$129.8 million** to **$180.7 million**[15](index=15&type=chunk) [Condensed Consolidated Statements of Operations (unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(unaudited)) Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Six months ended July 31, 2025 | Six months ended July 31, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $123,411 | $115,935 | $243,216 | $227,107 | | Gross profit | $104,410 | $95,855 | $205,031 | $187,684 | | Income (loss) from operations | $3,566 | $(16,027) | $(6,761) | $(37,760) | | Net income (loss) attributable to PagerDuty, Inc. | $9,575 | $(10,912) | $2,413 | $(28,051) | | Basic EPS | $0.11 | $(0.14) | $0.04 | $(0.40) | | Diluted EPS | $0.10 | $(0.14) | $0.03 | $(0.40) | - Revenue increased by **6.4%** for the three months ended July 31, 2025, and by **7.1%** for the six months ended July 31, 2025, compared to the prior year periods[17](index=17&type=chunk) - The company reported net income attributable to PagerDuty, Inc. of **$9.575 million** for the three months ended July 31, 2025, a significant improvement from a net loss of **$10.912 million** in the prior year period[17](index=17&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss%20(unaudited)) Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Six months ended July 31, 2025 | Six months ended July 31, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $9,414 | $(11,184) | $2,035 | $(28,529) | | Total comprehensive income (loss) | $9,083 | $(10,679) | $1,847 | $(28,526) | | Comprehensive income (loss) attributable to PagerDuty, Inc. | $9,244 | $(10,407) | $2,225 | $(28,048) | - Total comprehensive income attributable to PagerDuty, Inc. improved significantly to **$9.244 million** for the three months ended July 31, 2025, from a loss of **$10.407 million** in the same period last year[19](index=19&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(unaudited)) Condensed Consolidated Statements of Stockholders' Equity (in thousands, except share data) | Metric | Balance as of January 31, 2025 | Balance as of July 31, 2025 | | :----------------------------------- | :--------------------------- | :-------------------------- | | Total Stockholders' Equity | $129,828 | $180,709 | | Additional Paid-in Capital | $725,483 | $774,139 | | Accumulated Deficit | $(595,170) | $(592,757) | | Shares Outstanding | 91,082,604 | 93,238,538 | - Stockholders' equity increased by **$50.881 million** from January 31, 2025, to July 31, 2025, primarily driven by net income and stock-based compensation[22](index=22&type=chunk) - Additional paid-in capital increased by **$48.656 million**, reflecting stock option exercises, ESPP issuances, and stock-based compensation[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows (unaudited)](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Six months ended July 31, 2025 | Six months ended July 31, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $64,644 | $64,416 | | Net cash used in investing activities | $(8,860) | $(6,621) | | Net cash used in financing activities | $(63,040) | $(35,205) | | Net change in cash, cash equivalents, and restricted cash | $(7,143) | $22,567 | | Cash, cash equivalents, and restricted cash at end of period | $341,185 | $389,234 | - Net cash provided by operating activities remained stable at **$64.644 million** for the six months ended July 31, 2025, compared to **$64.416 million** in the prior year[27](index=27&type=chunk) - Net cash used in financing activities significantly increased to **$63.040 million**, primarily due to the repayment of **$57.5 million** in 2025 Convertible Senior Notes[27](index=27&type=chunk)[71](index=71&type=chunk) [Notes to Condensed Consolidated Financial Statements (unaudited)](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) [Note 1. Description of Business and Basis of Presentation](index=14&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) - PagerDuty, Inc. provides a digital operations management platform that leverages machine learning for incident response, event management, and automation[32](index=32&type=chunk) - The financial statements are prepared in accordance with U.S. GAAP and SEC interim reporting rules, and should be read with the Annual Report on Form 10-K for the year ended January 31, 2025[33](index=33&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=15&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) - The Company manages its operations as one operating segment, with the CEO as the chief operating decision maker[40](index=40&type=chunk) - No single customer accounted for **10%** or more of total accounts receivable or revenue for the periods presented[39](index=39&type=chunk) - Restricted cash, primarily collateral for office facility leases, was **$1.5 million** as of July 31, 2025, and **$1.9 million** as of January 31, 2025[43](index=43&type=chunk) [Note 3. Redeemable Non-Controlling Interest](index=16&type=section&id=Note%203.%20Redeemable%20Non-Controlling%20Interest) - PagerDuty established a joint venture, PagerDuty K.K., in May 2022, holding a **51%** controlling interest[47](index=47&type=chunk) Redeemable Non-Controlling Interest Activity (in thousands) | Metric | Three months ended July 31, 2025 | Six months ended July 31, 2025 | | :------------------------------------------ | :------------------------------- | :----------------------------- | | Balance at beginning of period | $17,335 | $18,217 | | Net loss attributable to redeemable non-controlling interest | $(161) | $(378) | | Adjustments to redeemable non-controlling interest | $(202) | $(867) | | Balance at end of period | $16,972 | $16,972 | [Note 4. Cash, Cash Equivalents, and Investments](index=17&type=section&id=Note%204.%20Cash,%20Cash%20Equivalents,%20and%20Investments) Cash, Cash Equivalents, and Investments (in thousands) | Category | July 31, 2025 | January 31, 2025 | | :----------------------------- | :------------ | :--------------- | | Cash and cash equivalents | $339,712 | $346,460 | | Available-for-sale investments | $228,142 | $224,366 | | Total | $567,854 | $570,826 | - Total cash, cash equivalents, and investments decreased slightly from **$570.8 million** to **$567.9 million**[50](index=50&type=chunk) - As of July 31, 2025, **95 securities** were in an unrealized loss position with an aggregate fair value of **$166.8 million**, none continuously for more than **12 months**[52](index=52&type=chunk) [Note 5. Fair Value Measurements](index=18&type=section&id=Note%205.%20Fair%20Value%20Measurements) Fair Value Measurements (in thousands) as of July 31, 2025 | Category | Level 1 | Level 2 | Level 3 | Total | | :-------------------------- | :-------- | :-------- | :-------- | :-------- | | Money market funds | $290,107 | $— | $— | $290,107 | | U.S. Treasury securities | $— | $58,919 | $— | $58,919 | | Commercial paper | $— | $6,011 | $— | $6,011 | | Corporate debt securities | $— | $132,511 | $— | $132,511 | | U.S. Government agency securities | $— | $30,701 | $— | $30,701 | | Total | $290,107 | $228,142 | $— | $518,249 | - The estimated fair value of the 2028 Convertible Senior Notes was approximately **$386.9 million** as of July 31, 2025, classified as Level 2[60](index=60&type=chunk) [Note 6. Property and Equipment, Net](index=20&type=section&id=Note%206.%20Property%20and%20Equipment,%20Net) Property and Equipment, Net (in thousands) | Category | July 31, 2025 | January 31, 2025 | | :-------------------------------- | :------------ | :--------------- | | Gross property and equipment | $54,473 | $47,010 | | Accumulated depreciation and amortization | $(29,262) | $(25,675) | | Property and equipment, net | $25,211 | $21,335 | - Net property and equipment increased by **$3.876 million** from January 31, 2025, to July 31, 2025[61](index=61&type=chunk) - Depreciation and amortization expense was **$1.8 million** for the three months ended July 31, 2025, and **$3.9 million** for the six months ended July 31, 2025[62](index=62&type=chunk) [Note 7. Deferred Contract Costs](index=20&type=section&id=Note%207.%20Deferred%20Contract%20Costs) - Deferred contract costs, primarily sales commissions, were **$44.1 million** as of July 31, 2025, down from **$45.1 million** as of January 31, 2025[63](index=63&type=chunk) - Amortization expense for deferred contract costs was **$5.7 million** for the three months ended July 31, 2025, and **$11.2 million** for the six months ended July 31, 2025[63](index=63&type=chunk) [Note 8. Leases](index=20&type=section&id=Note%208.%20Leases) Lease Information (in thousands) | Category | July 31, 2025 | January 31, 2025 | | :------------------------ | :------------ | :--------------- | | Lease right-of-use assets | $8,266 | $6,806 | | Lease liabilities, current | $3,646 | $3,307 | | Lease liabilities, non-current | $10,186 | $9,637 | - As of July 31, 2025, the weighted average remaining lease term was **3.7 years**, and the weighted average discount rate was **5.6%**[69](index=69&type=chunk) - Operating lease expense for the six months ended July 31, 2025, was **$1.4 million**, down from **$1.7 million** in the prior year[70](index=70&type=chunk) [Note 9. Debt and Financing Arrangements](index=21&type=section&id=Note%209.%20Debt%20and%20Financing%20Arrangements) - The Company repaid **$57.5 million** of its 2025 Convertible Senior Notes in cash during the three months ended July 31, 2025[71](index=71&type=chunk) Net Carrying Amount of Convertible Notes (in thousands) | Note Type | July 31, 2025 | January 31, 2025 | | :---------- | :------------ | :--------------- | | 2025 Notes | $— | $57,426 | | 2028 Notes | $394,541 | $393,282 | | Total | $394,541 | $450,708 | - Interest expense related to the Notes was **$2.286 million** for the three months ended July 31, 2025, and **$4.650 million** for the six months ended July 31, 2025[75](index=75&type=chunk) - The 2025 Capped Calls expired in connection with the repayment of the 2025 Notes, while the 2028 Capped Calls remain outstanding[77](index=77&type=chunk)[78](index=78&type=chunk) [Note 10. Commitments and Contingencies](index=23&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) - The Company is not currently a party to any material legal proceedings and has not incurred significant liabilities related to service-level agreements[79](index=79&type=chunk)[80](index=80&type=chunk) [Note 11. Deferred Revenue and Performance Obligations](index=23&type=section&id=Note%2011.%20Deferred%20Revenue%20and%20Performance%20Obligations) Deferred Revenue (in thousands) | Metric | Three months ended July 31, 2025 | Six months ended July 31, 2025 | | :-------------------------- | :------------------------------- | :----------------------------- | | Deferred revenue, beginning of period | $239,712 | $245,752 | | Billings | $113,613 | $227,378 | | Revenue recognized | $(123,411) | $(243,216) | | Deferred revenue, end of period | $229,914 | $229,914 | - As of July 31, 2025, total transaction price allocated to remaining non-cancelable performance obligations was approximately **$425 million**[85](index=85&type=chunk) - The Company expects to recognize approximately **$295 million (69%)** of remaining performance obligations over the next **12 months**[85](index=85&type=chunk) [Note 12. Common Stock and Stockholders' Equity](index=24&type=section&id=Note%2012.%20Common%20Stock%20and%20Stockholders'%20Equity) - The Board authorized a new **$150.0 million** share repurchase program in March 2025, with no shares repurchased as of July 31, 2025[87](index=87&type=chunk) - As of July 31, 2025, **$161.2 million** of unrecognized stock-based compensation expense related to unvested RSUs is expected to be recognized over a weighted average period of **2.2 years**[93](index=93&type=chunk) Total Stock-Based Compensation Expense (in thousands) | Period | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Six months ended July 31, 2025 | Six months ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total stock-based compensation expense | $25,960 | $32,366 | $51,713 | $65,306 | [Note 13. Net Income (Loss) per Share](index=26&type=section&id=Note%2013.%20Net%20Income%20(Loss)%20per%20Share) Net Income (Loss) per Share Attributable to PagerDuty, Inc. Common Stockholders | Metric | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Six months ended July 31, 2025 | Six months ended July 31, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to PagerDuty, Inc. common stockholders | $9,777 | $(13,242) | $3,280 | $(37,298) | | Basic EPS | $0.11 | $(0.14) | $0.04 | $(0.40) | | Diluted EPS | $0.10 | $(0.14) | $0.03 | $(0.40) | - Diluted EPS improved to **$0.10** for the three months ended July 31, 2025, from a loss of **$0.14** in the prior year period[104](index=104&type=chunk) [Note 14. Income Taxes](index=27&type=section&id=Note%2014.%20Income%20Taxes) - The Company recorded an income tax benefit of **$1.9 million** for the three months ended July 31, 2025, compared to a provision of **$0.4 million** in the prior year[108](index=108&type=chunk) - The U.S. enacted tax reform legislation (OBBBA) on July 4, 2025, effective fiscal 2026, which management does not expect to have a material impact[109](index=109&type=chunk) - The Company maintains a valuation allowance for its net U.S. deferred tax assets but believes there is a reasonable possibility that it may no longer be needed within the next **12 months**[110](index=110&type=chunk) [Note 15. Geographic Information](index=28&type=section&id=Note%2015.%20Geographic%20Information) Revenue by Geographic Area (in thousands) | Region | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Six months ended July 31, 2025 | Six months ended July 31, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $88,081 | $84,315 | $174,112 | $165,107 | | International | $35,330 | $31,620 | $69,104 | $62,000 | | Total | $123,411 | $115,935 | $243,216 | $227,107 | - International revenue grew by **11.7%** for the three months ended July 31, 2025, and by **11.5%** for the six months ended July 31, 2025[111](index=111&type=chunk) - As of July 31, 2025, **72%** of long-lived assets were in the United States, **15%** in Canada, and **11%** in Portugal[112](index=112&type=chunk) [Note 16. Subsequent Events](index=29&type=section&id=Note%2016.%20Subsequent%20Events) - In August 2025, the Board of Directors authorized an additional **$50.0 million** for the 2025 Share Repurchase Program, increasing the total to **$200.0 million**[114](index=114&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses PagerDuty's financial condition and operational results, covering business model, key metrics, financial performance for Q2 and H1 2025 vs 2024, non-GAAP measures, and liquidity [Overview and Business Model](index=30&type=section&id=Overview%20and%20Business%20Model) - PagerDuty is a global leader in digital operations management, offering the PagerDuty Operations Cloud which combines AIOps, automation, customer service operations, and incident management with a generative AI assistant[117](index=117&type=chunk) - The platform collects data from over **700 direct integrations**, leveraging AI and machine learning to predict and resolve incidents[119](index=119&type=chunk)[120](index=120&type=chunk) - Revenue is primarily generated from cloud-hosted software subscription fees, with a 'land-and-expand' business model focused on enterprise customers[121](index=121&type=chunk)[122](index=122&type=chunk) [Macroeconomic Environment](index=31&type=section&id=Macroeconomic%20Environment) - The company's business and financial performance are subject to global macroeconomic conditions, including inflation, interest rates, and economic uncertainty[123](index=123&type=chunk) [Key Business Metrics](index=31&type=section&id=Key%20Business%20Metrics) Key Business Metrics | Metric | As of July 31, 2025 | As of July 31, 2024 | | :----------------------------------- | :------------------ | :------------------ | | Annual Recurring Revenue (ARR) | $498.9 million | $474.0 million | | Number of Customers | 15,322 | 15,044 | | Customers with >$100.0k ARR | 868 | 820 | | Dollar-based Net Retention Rate (LTM) | 102 % | 106 % | - ARR increased by **5.25%** year-over-year to **$498.9 million** as of July 31, 2025[128](index=128&type=chunk) - The number of customers with greater than **$100.0 thousand** in ARR increased by **5.85%** to **868**[129](index=129&type=chunk) - Dollar-based net retention rate decreased to **102%** for the last **12 months** ended July 31, 2025, from **106%** in the prior year[131](index=131&type=chunk) [Results of Operations (Three months ended July 31, 2025 compared to three months ended July 31, 2024)](index=33&type=section&id=Results%20of%20Operations) Key Financial Highlights (Three months ended July 31, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------------- | :------- | :------- | :--------- | :--------- | | Revenue | $123,411 | $115,935 | $7,476 | 6.4 % | | Gross profit | $104,410 | $95,855 | $8,555 | 8.9 % | | Income (loss) from operations | $3,566 | $(16,027) | $19,593 | 122.2 % | | Net income (loss) | $9,414 | $(11,184) | $20,598 | 184.2 % | - Revenue growth was primarily driven by existing customers, increasing users, and upsell of additional products[136](index=136&type=chunk) - Gross margin improved to **84.6%** in Q2 2025 from **82.7%** in Q2 2024, due to decreased amortization of acquired intangible assets and lower outside services spend[139](index=139&type=chunk) - Total operating expenses decreased by **9.9%** to **$100.844 million**, primarily due to lower personnel costs and stock-based compensation in R&D and S&M[141](index=141&type=chunk)[142](index=142&type=chunk)[144](index=144&type=chunk) [Revenue](index=34&type=section&id=Revenue) - Revenue increased by **$7.476 million**, or **6.4%**, to **$123.411 million** for the three months ended July 31, 2025, compared to **$115.935 million** for the three months ended July 31, 2024[136](index=136&type=chunk) [Cost of Revenue and Gross Margin](index=34&type=section&id=Cost%20of%20Revenue%20and%20Gross%20Margin) - Cost of revenue decreased by **$1.079 million**, or **5.4%**, to **$19.001 million** for the three months ended July 31, 2025[139](index=139&type=chunk) - Gross margin increased to **84.6%** for the three months ended July 31, 2025, from **82.7%** in the prior year[139](index=139&type=chunk) [Operating Expenses](index=35&type=section&id=Operating%20Expenses) Operating Expenses (Three months ended July 31, in thousands) | Expense Category | 2025 | 2024 | Change ($) | Change (%) | | :------------------------ | :------- | :------- | :--------- | :--------- | | Research and development | $30,897 | $35,088 | $(4,191) | (11.9)% | | Sales and marketing | $44,456 | $50,966 | $(6,510) | (12.8)% | | General and administrative | $25,491 | $25,828 | $(337) | (1.3)% | | Total operating expenses | $100,844 | $111,882 | $(11,038) | (9.9)% | - Research and development expenses decreased by **$4.1 million** due to lower personnel costs and stock-based compensation[142](index=142&type=chunk) - Sales and marketing expenses decreased by **$6.5 million**, driven by reduced personnel costs, outside services, and training/travel[144](index=144&type=chunk) [Non-Operating Expenses](index=36&type=section&id=Non-Operating%20Expenses) Non-Operating Income (Expenses) (Three months ended July 31, in thousands) | Category | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------------ | :------- | :------- | :--------- | :--------- | | Interest income | $6,149 | $7,516 | $(1,367) | (18.2)% | | Interest expense | $(2,286) | $(2,363) | $77 | (3.3)% | | Other income, net | $120 | $117 | $3 | 2.6 % | | (Benefit from) provision for income taxes | $(1,865) | $427 | $(2,292) | (536.8)% | - Interest income decreased by **18.2%** due to lower interest-earning cash balances[148](index=148&type=chunk) - The company recorded an income tax benefit of **$1.865 million**, a significant change from a provision of **$0.427 million** in the prior year[153](index=153&type=chunk) [Results of Operations (Six months ended July 31, 2025 compared to six months ended July 31, 2024)](index=37&type=section&id=Results%20of%20Operations%20(Six%20months%20ended%20July%2031,%202025%20compared%20to%20six%20months%20ended%20July%2031,%202024)) Key Financial Highlights (Six months ended July 31, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------------- | :------- | :------- | :--------- | :--------- | | Revenue | $243,216 | $227,107 | $16,109 | 7.1 % | | Gross profit | $205,031 | $187,684 | $17,347 | 9.2 % | | Loss from operations | $(6,761) | $(37,760) | $30,999 | 82.1 % | | Net income (loss) | $2,035 | $(28,529) | $30,564 | 107.1 % | - Revenue increased by **7.1%** to **$243.216 million** for the six months ended July 31, 2025[156](index=156&type=chunk) - Operating loss significantly narrowed by **82.1%** to **$(6.761) million**, reflecting improved operational efficiency[155](index=155&type=chunk) - Net income for the six months ended July 31, 2025, was **$2.035 million**, a substantial improvement from a net loss of **$28.529 million** in the prior year[155](index=155&type=chunk) [Revenue](index=37&type=section&id=Revenue_SixMonths) - Revenue increased by **$16.109 million**, or **7.1%**, to **$243.216 million** for the six months ended July 31, 2025, compared to **$227.107 million** for the six months ended July 31, 2024[156](index=156&type=chunk) [Cost of Revenue and Gross Margin](index=39&type=section&id=Cost%20of%20Revenue%20and%20Gross%20Margin_SixMonths) - Cost of revenue decreased by **$1.238 million**, or **3.1%**, to **$38.185 million** for the six months ended July 31, 2025[160](index=160&type=chunk) - Gross margin increased to **84.3%** for the six months ended July 31, 2025, from **82.6%** in the prior year[160](index=160&type=chunk) [Operating Expenses](index=39&type=section&id=Operating%20Expenses_SixMonths) Operating Expenses (Six months ended July 31, in thousands) | Expense Category | 2025 | 2024 | Change ($) | Change (%) | | :------------------------ | :------- | :------- | :--------- | :--------- | | Research and development | $64,945 | $72,611 | $(7,666) | (10.6)% | | Sales and marketing | $94,501 | $99,465 | $(4,964) | (5.0)% | | General and administrative | $52,346 | $53,368 | $(1,022) | (1.9)% | | Total operating expenses | $211,792 | $225,444 | $(13,652) | (6.1)% | - Research and development expenses decreased by **$7.1 million** due to lower personnel costs and stock-based compensation[161](index=161&type=chunk) - Sales and marketing expenses decreased by **$4.964 million**, primarily from reduced outside services and personnel costs[162](index=162&type=chunk) [Non-Operating Expenses](index=40&type=section&id=Non-Operating%20Expenses_SixMonths) Non-Operating Income (Expenses) (Six months ended July 31, in thousands) | Category | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------------ | :------- | :------- | :--------- | :--------- | | Interest income | $12,160 | $14,496 | $(2,336) | (16.1)% | | Interest expense | $(4,650) | $(4,511) | $(139) | 3.1 % | | Other income (expense), net | $234 | $(134) | $368 | (274.6)% | | (Benefit from) provision for income taxes | $(1,052) | $620 | $(1,672) | (269.7)% | - Interest income decreased by **16.1%** due to lower interest-earning cash balances[164](index=164&type=chunk) - The company reported an income tax benefit of **$1.052 million**, a significant improvement from a provision of **$0.620 million** in the prior year[166](index=166&type=chunk) [Non-GAAP Financial Measures](index=40&type=section&id=Non-GAAP%20Financial%20Measures) - PagerDuty uses non-GAAP financial measures (excluding stock-based compensation, employer taxes, amortization of acquired intangibles, acquisition-related expenses, debt issuance costs, restructuring costs, shareholder matters, and non-controlling interest adjustments) to evaluate operating performance and for internal planning[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) [Non-GAAP gross profit and non-GAAP gross margin](index=41&type=section&id=Non-GAAP%20gross%20profit%20and%20non-GAAP%20gross%20margin) Non-GAAP Gross Profit and Margin (in thousands) | Metric | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Six months ended July 31, 2025 | Six months ended July 31, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Non-GAAP gross profit | $106,254 | $99,668 | $209,283 | $195,704 | | Non-GAAP gross margin | 86.1 % | 86.0 % | 86.0 % | 86.2 % | - Non-GAAP gross margin remained stable at approximately **86%** for both the three and six months ended July 31, 2025 and 2024[178](index=178&type=chunk) [Non-GAAP operating income and non-GAAP operating margin](index=42&type=section&id=Non-GAAP%20operating%20income%20and%20non-GAAP%20operating%20margin) Non-GAAP Operating Income and Margin (in thousands) | Metric | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Six months ended July 31, 2025 | Six months ended July 31, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Non-GAAP operating income | $31,407 | $20,111 | $55,766 | $35,440 | | Non-GAAP operating margin | 25.4 % | 17.3 % | 22.9 % | 15.6 % | - Non-GAAP operating margin significantly improved to **25.4%** for the three months ended July 31, 2025, from **17.3%** in the prior year[180](index=180&type=chunk) [Non-GAAP net income attributable to PagerDuty, Inc. common stockholders](index=43&type=section&id=Non-GAAP%20net%20income%20attributable%20to%20PagerDuty,%20Inc.%20common%20stockholders) Non-GAAP Net Income Attributable to PagerDuty, Inc. Common Stockholders (in thousands) | Metric | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Six months ended July 31, 2025 | Six months ended July 31, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Non-GAAP net income attributable to PagerDuty, Inc. common stockholders | $28,276 | $20,331 | $50,955 | $36,336 | - Non-GAAP net income increased by **39.1%** to **$28.276 million** for the three months ended July 31, 2025[182](index=182&type=chunk) [Free cash flow](index=43&type=section&id=Free%20cash%20flow) Free Cash Flow (in thousands) | Metric | Three months ended July 31, 2025 | Three months ended July 31, 2024 | Six months ended July 31, 2025 | Six months ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $33,974 | $35,769 | $64,644 | $64,416 | | Free cash flow | $30,207 | $33,283 | $59,193 | $60,381 | - Free cash flow for the six months ended July 31, 2025, was **$59.193 million**, a slight decrease from **$60.381 million** in the prior year[184](index=184&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) - As of July 31, 2025, principal sources of liquidity were cash, cash equivalents, and investments totaling **$567.9 million**[185](index=185&type=chunk) - The company believes existing liquidity and operating cash flows will be sufficient for working capital and capital expenditures for at least the next **12 months**[185](index=185&type=chunk) - Deferred revenue was **$229.9 million** as of July 31, 2025, with **$227.0 million** expected to be recognized as current revenue[187](index=187&type=chunk) - The 2025 Convertible Notes (**$57.5 million** principal) were repaid in cash during the three months ended July 31, 2025[186](index=186&type=chunk) - In August 2025, the Board authorized an additional **$50.0 million** for the 2025 Share Repurchase Program, increasing the total to **$200.0 million**[190](index=190&type=chunk) [Sources and Uses of Liquidity](index=44&type=section&id=Sources%20and%20Uses%20of%20Liquidity) - As of July 31, 2025, the Company's liquidity sources included **$567.9 million** in cash, cash equivalents, and investments[185](index=185&type=chunk) [Debt and Financing Arrangements](index=44&type=section&id=Debt%20and%20Financing%20Arrangements_Liquidity) - The **$57.5 million** principal of the 2025 Notes was repaid in cash at maturity during the three months ended July 31, 2025[186](index=186&type=chunk) [Deferred Revenue](index=44&type=section&id=Deferred%20Revenue_Liquidity) - Deferred revenue totaled **$229.9 million** as of July 31, 2025, with **$227.0 million** classified as current liability[187](index=187&type=chunk) [Share Repurchase Programs](index=45&type=section&id=Share%20Repurchase%20Programs_Liquidity) - The 2025 Share Repurchase Program was increased to **$200.0 million** in August 2025, with no shares repurchased as of July 31, 2025[189](index=189&type=chunk)[190](index=190&type=chunk) [Future Contractual Obligations](index=45&type=section&id=Future%20Contractual%20Obligations) - Total debt obligations are **$394.5 million** (long-term), and operating lease obligations include **$3.6 million** current and **$10.2 million** long-term[192](index=192&type=chunk) [Effect of Exchange Rates](index=45&type=section&id=Effect%20of%20Exchange%20Rates) - Foreign exchange rates had a positive effect of **$0.1 million** on cash in the six months ended July 31, 2025, compared to a negative effect of **$23.0 thousand** in the prior year[193](index=193&type=chunk) [Cash Flow Information](index=45&type=section&id=Cash%20Flow%20Information) Cash Flow Summary (Six months ended July 31, in thousands) | Category | 2025 | 2024 | Change ($) | | :---------------------------------------------------------- | :------- | :------- | :--------- | | Net cash provided by operating activities | $64,644 | $64,416 | $228 | | Net cash used in investing activities | $(8,860) | $(6,621) | $(2,239) | | Net cash used in financing activities | $(63,040) | $(35,205) | $(27,835) | | Net change in cash, cash equivalents, and restricted cash | $(7,143) | $22,567 | $(29,710) | - Net cash used in financing activities increased significantly due to the repayment of the 2025 Convertible Notes[197](index=197&type=chunk) [Off-Balance Sheet Arrangements](index=46&type=section&id=Off-Balance%20Sheet%20Arrangements) - The Company had **$1.4 million** of irrevocable standby letters of credit outstanding as of July 31, 2025, fully collateralized by restricted cash[199](index=199&type=chunk) [Critical Accounting Estimates](index=46&type=section&id=Critical%20Accounting%20Estimates) - There have been no material changes to critical accounting policies and estimates since the Annual Report on Form 10-K for the year ended January 31, 2025[200](index=200&type=chunk) [Recent Accounting Pronouncements](index=46&type=section&id=Recent%20Accounting%20Pronouncements) - The Company is evaluating the impact of new FASB ASUs on income tax disclosures (ASU 2023-09), income statement expense disaggregation (ASU 2024-03), and induced conversion of convertible debt (ASU 2024-04)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[201](index=201&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there have been no material changes in the company's market risk since its last Annual Report on Form 10-K - No material changes in market risk have occurred since the Annual Report on Form 10-K for the year ended January 31, 2025[202](index=202&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with CEO and CFO, concluded disclosure controls and procedures were effective as of July 31, 2025, with no material changes to internal controls over financial reporting - Disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of July 31, 2025[204](index=204&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended July 31, 2025[206](index=206&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=46&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The CEO and CFO concluded that disclosure controls and procedures were effective as of July 31, 2025[204](index=204&type=chunk) [Limitations on the Effectiveness of Controls](index=47&type=section&id=Limitations%20on%20the%20Ef%20ectiveness%20of%20Controls) - The effectiveness of any internal control system is subject to inherent limitations, providing reasonable, not absolute, assurance[205](index=205&type=chunk) [Changes in Internal Controls Over Financial Reporting](index=47&type=section&id=Changes%20in%20Internal%20Controls%20Over%20Financial%20Reporting) - No material changes to internal control over financial reporting were identified during the quarter ended July 31, 2025[206](index=206&type=chunk) [PART II - OTHER INFORMATION](index=48&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material pending legal proceedings - The Company is not a party to any material pending legal proceedings[208](index=208&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) This section reiterates that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes from the risk factors described in the Annual Report on Form 10-K for the year ended January 31, 2025, or the Quarterly Report on Form 10-Q for the quarter ended April 30, 2025[210](index=210&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company reported no unregistered sales of equity securities or use of proceeds. No shares were repurchased under the 2025 Share Repurchase Program during the three months ended July 31, 2025 - No unregistered sales of equity securities or use of proceeds were reported[211](index=211&type=chunk)[212](index=212&type=chunk) - No shares were repurchased under the 2025 Share Repurchase Program during the three months ended July 31, 2025[213](index=213&type=chunk) [Item 3. Defaults Upon Senior Securities](index=48&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[214](index=214&type=chunk) [Item 4. Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable[215](index=215&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) This section notes the termination of a Rule 10b5-1 trading plan by a former Senior Vice President - Shelley Webb, former SVP, Chief Legal and People Officer, terminated a Rule 10b5-1 trading plan on May 14, 2025[216](index=216&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of this report, including certifications, XBRL documents, and other corporate governance documents - Exhibits include certifications of the CEO and CFO (31.1, 31.2, 32.1) and XBRL taxonomy documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[218](index=218&type=chunk) [SIGNATURES](index=51&type=section&id=SIGNATURES) The report is duly signed on behalf of PagerDuty, Inc. by its Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer - The report was signed by Jennifer G. Tejada (CEO), Owen Howard Wilson (CFO), and Paul Underwood (Chief Accounting Officer) on September 3, 2025[222](index=222&type=chunk)

Financial Data and Key Metrics Changes - PagerDuty reported revenue of $123 million, representing a 6% year-over-year growth [3][20] - Achieved GAAP profitability for the first time in company history, with a non-GAAP operating margin of 25%, exceeding guidance and showing an 800 basis point year-over-year expansion [3][20] - Annual recurring revenue (ARR) increased to $499 million, reflecting a 5% year-over-year growth [4][20] - Gross margin for Q2 was 86%, at the high end of the target range of 84% to 86% [22] - Cash from operations was $34 million, or 28% of revenue, with free cash flow at $30 million, or 24% of revenue [22] Business Line Data and Key Metrics Changes - New and expansion bookings increased by over 15% sequentially [4] - High-value customer base (spending over $100,000) grew to 868 customers, an increase of 20 customers sequentially and 48 year-over-year [5] - Dollar-based net retention (DBNR) was 102%, down from 104% in Q1, impacted by elevated churn and downgrades [20] Market Data and Key Metrics Changes - International revenue increased by 12% year-over-year, contributing 29% of total revenue [20] - Total paid customers grew to 15,322, adding 75 net new customers in Q2 [21] - Free and paid companies on the platform exceeded 33,000, marking a 13% increase compared to Q2 of the previous year [21] Company Strategy and Development Direction - The company is focusing on a strategic shift towards usage-based pricing models to better align revenue with customer value realization [5][35] - Continued investment in product innovation, including the launch of four new AI agents, which will be released with usage-based pricing models [9][10] - The appointment of a new Chief Revenue Officer aims to accelerate enterprise transformation and improve sales performance [17][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of new and expansion revenue, with strong performance in international markets [34] - The transition to usage-based pricing is expected to enhance customer retention and align monetization with customer value [35][62] - Management anticipates significant incremental ARR growth in the second half of the fiscal year, supported by a maturing enterprise sales motion [20][25] Other Important Information - The company retired $58 million of convertible debt issued in June 2020, enhancing its financial position [23] - PagerDuty was recognized as the AIOps platform of the year in the 2025 AI Breakthrough Awards [16] - The Board expanded the share repurchase program to $200 million, providing flexibility for opportunistic share buybacks [23] Q&A Session Summary Question: What is the outlook for profitability and growth in the IT operations category? - Management noted that new and expansion revenue is showing recovery, with a 15% sequential increase and strong new customer additions [34] Question: What are the priorities for the new Chief Revenue Officer in the upcoming months? - The focus will be on accelerating enterprise transformation, improving sales consistency, and enhancing customer retention [37] Question: How does the company view the quality of its ARR? - The company has shifted towards large, long-term, profitable customers, with over 75% of ARR coming from enterprise companies [47] Question: What is the expected impact of the transition to usage-based pricing? - Management indicated that customers are open to the transition, and early feedback has been positive, with 60% of new products already utilizing this model [58] Question: How is the company addressing the challenges of seat optimization and downgrades? - Management is focused on improving account management and customer success to mitigate downgrades while also seeing growth in platform usage [62]

Financial Performance - Q2 FY26 revenue reached $123 million[10], representing a 6% year-over-year growth[59] - The company's ARR is $499 million[10] - Non-GAAP operating margin was 25%[10] - Free cash flow margin was 24%[10] - Dollar-based net retention (DBNR) was 102%[10] Customer Base - PagerDuty has a total of 15,322 paid customers[10] - The company has 868 customers with ARR greater than $100K[10] Product and Market - PagerDuty operates in a $50 billion market opportunity[47] - The company estimates it has approximately 1% penetration worldwide within its target markets[48] - Incident downtime costs approximately $4,537 per minute, equating to $794,000 per incident[48] Operational Efficiency - A Forrester study indicates a 249% return on investment (ROI) over three years with PagerDuty Operations Cloud[50]

[Executive Summary](index=1&type=section&id=Executive%20Summary) PagerDuty achieved GAAP profitability, solid international growth, and increased paid customer additions, appointing a new CRO [Q2 FY26 Performance Overview](index=1&type=section&id=Q2%20FY26%20Performance%20Overview) PagerDuty achieved GAAP profitability with $123 million revenue and $499 million ARR, driven by international growth and customer additions - PagerDuty achieved **GAAP profitability** in Q2 FY26[2](index=2&type=chunk) - Solid growth observed across international markets and **paid customer additions** outpaced last year's full-year performance[2](index=2&type=chunk) - New Chief Revenue Officer appointed to lead global go-to-market strategy and drive revenue growth[1](index=1&type=chunk)[2](index=2&type=chunk) | Metric | Q2 FY26 Performance | | :-------------------------------- | :------------------ | | Revenue | $123 million (+6% YoY) | | Annual Recurring Revenue (ARR) | $499 million (+5% YoY) | | Operating Income (GAAP) | Nearly $4 million | | Operating Income (Non-GAAP) | $31 million | [Second Quarter Fiscal 2026 Financial Highlights](index=1&type=section&id=Second%20Quarter%20Fiscal%202026%20Financial%20Highlights) This section details PagerDuty's GAAP and non-GAAP financial performance, including revenue, operating income, and cash flow [GAAP Financial Performance](index=1&type=section&id=GAAP%20Financial%20Performance) PagerDuty reported GAAP revenue of $123.4 million (+6.4% YoY) and achieved a positive operating income of $3.6 million | Metric (GAAP) | Q2 FY26 (3 months) | Q2 FY25 (3 months) | YoY Change | | :--------------------------- | :----------------- | :----------------- | :--------- | | Revenue | $123.4 million | $115.9 million | +6.4% | | Operating Income | $3.6 million | $(16.0) million | N/A | | Operating Margin | 2.9% | (13.8)% | +16.7 pp | | Net Income per Diluted Share | $0.10 | $(0.14) | N/A | [Non-GAAP Financial Performance](index=1&type=section&id=Non-GAAP%20Financial%20Performance) PagerDuty reported non-GAAP operating income of $31.4 million (25.4% margin) and diluted EPS of $0.30 | Metric (Non-GAAP) | Q2 FY26 (3 months) | Q2 FY25 (3 months) | YoY Change | | :-------------------------- | :----------------- | :----------------- | :--------- | | Operating Income | $31.4 million | $20.1 million | +56.2% | | Operating Margin | 25.4% | 17.3% | +8.1 pp | | Net Income per Diluted Share | $0.30 | $0.21 | +42.9% | [Cash Flow and Liquidity](index=1&type=section&id=Cash%20Flow%20and%20Liquidity) PagerDuty generated **$34.0 million** in operating cash and **$30.2 million** in free cash flow, maintaining a strong cash position | Metric | Q2 FY26 (3 months) | Q2 FY25 (3 months) | | :---------------------------------------- | :----------------- | :----------------- | | Net cash provided by operating activities | $34.0 million | $35.8 million | | Free cash flow | $30.2 million | $33.3 million | | Cash, cash equivalents, and investments (as of July 31, 2025) | $567.9 million | N/A | [Second Quarter and Recent Highlights](index=2&type=section&id=Second%20Quarter%20and%20Recent%20Highlights) This section covers key business metrics, product innovations, industry recognition, and leadership changes [Key Business Metrics](index=2&type=section&id=Key%20Business%20Metrics) PagerDuty experienced continued growth in its customer base and ARR, despite a slight decrease in net retention rate | Metric | As of July 31, 2025 | As of July 31, 2024 | YoY Change | | :------------------------------ | :------------------ | :------------------ | :--------- | | ARR | $499 million | N/A | +5% | | Customers with ARR over $100k | 868 | 820 | +6% | | Dollar-based net retention rate | 102% | 106% | -4 pp | | Total paid customers | 15,322 | 15,044 | +1.8% | | Total free and paid customers | >33,000 | N/A | +13% | [Product Innovations and Industry Recognition](index=2&type=section&id=Product%20Innovations%20and%20Industry%20Recognition) PagerDuty launched new AI-powered integrations and received multiple industry accolades, reinforcing its AIOps leadership - Released AI-powered, chat-first integration between PagerDuty Advance and Amazon Q Business[8](index=8&type=chunk) - Recognized as a Leader and Outperformer in the 2025 GigaOm Radar for Incident Response Platforms Report for a third consecutive year[8](index=8&type=chunk) - Named a leader in GigaOm Radar for AIOps for the fourth year and awarded as the AIOps Platform of the Year in the 2025 AI Breakthrough Awards[8](index=8&type=chunk) [Leadership and Customer Engagements](index=2&type=section&id=Leadership%20and%20Customer%20Engagements) PagerDuty appointed Todd McNabb as Chief Revenue Officer and reported new customer acquisitions and expansions - Todd McNabb appointed as Chief Revenue Officer, effective September 29, 2025, to lead global go-to-market strategy and drive revenue growth and retention[8](index=8&type=chunk) - New customer lands and expansions include Bupa Limited, ChainLink Labs Inc., The Lego Group, Shopify, and Starhub Ltd[8](index=8&type=chunk) [Financial Outlook](index=3&type=section&id=Financial%20Outlook) This section provides PagerDuty's financial guidance for the upcoming third quarter and the full fiscal year 2026 [Third Quarter Fiscal 2026 Guidance](index=3&type=section&id=Third%20Quarter%20Fiscal%202026%20Guidance) PagerDuty expects Q3 FY26 total revenue between **$124.0 million** and **$126.0 million**, with non-GAAP diluted EPS of **$0.24** to **$0.25** | Metric | Q3 FY26 Guidance | YoY Growth | | :---------------------------------------- | :--------------- | :--------- | | Total revenue | $124.0M - $126.0M | 4% - 6% | | Non-GAAP net income per diluted share | $0.24 - $0.25 | N/A | [Full Fiscal Year 2026 Guidance](index=3&type=section&id=Full%20Fiscal%20Year%202026%20Guidance) PagerDuty updated its FY26 guidance, expecting total revenue between **$493.0 million** and **$497.0 million**, and diluted EPS of **$1.00** to **$1.04** | Metric | FY26 Guidance | Previous Guidance | YoY Growth | | :---------------------------------------- | :------------ | :---------------- | :--------- | | Total revenue | $493.0M - $497.0M | $493.0M - $499.0M | 5% - 6% | | Non-GAAP net income per diluted share | $1.00 - $1.04 | $0.95 - $1.00 | N/A | [About PagerDuty, Inc.](index=4&type=section&id=About%20PagerDuty,%20Inc.) This section provides an overview of PagerDuty as a company and its core AI-powered digital operations management platform [Company Overview](index=4&type=section&id=Company%20Overview) PagerDuty, Inc. is a global leader in digital operations management, offering an AI-powered platform for business resilience - PagerDuty, Inc. (NYSE:PD) is a global leader in digital operations management[16](index=16&type=chunk) - The PagerDuty Operations Cloud is an AI-powered platform that empowers business resilience and drives operational efficiency[16](index=16&type=chunk) - Trusted by nearly half of both the Fortune 500 and the Forbes AI 50, and approximately two-thirds of the Fortune 100[16](index=16&type=chunk) [The PagerDuty Operations Cloud](index=4&type=section&id=The%20PagerDuty%20Operations%20Cloud) The PagerDuty Operations Cloud is an AI-powered platform that automates and orchestrates the entire incident management lifecycle - The PagerDuty Operations Cloud is an AI-powered platform that automates and orchestrates the entire incident management lifecycle[17](index=17&type=chunk) - Empowers teams to identify and diagnose disruptions in real time and mobilize the right teams to quickly streamline workflows[17](index=17&type=chunk) - Essential for delivering flawless, always-on digital experiences that organizations and consumers expect today[17](index=17&type=chunk) [Condensed Consolidated Financial Statements (GAAP)](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(GAAP)) This section presents PagerDuty's GAAP financial statements, including statements of operations, balance sheets, and cash flows [Statements of Operations](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The statements of operations detail PagerDuty's GAAP financial performance, including revenue, gross profit, operating expenses, and net income | Metric | 3 months ended July 31, 2025 | 3 months ended July 31, 2024 | 6 months ended July 31, 2025 | 6 months ended July 31, 2024 | | :------------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue | $123,411 | $115,935 | $243,216 | $227,107 | | Gross profit | $104,410 | $95,855 | $205,031 | $187,684 | | Income (loss) from operations | $3,566 | $(16,027) | $(6,761) | $(37,760) | | Net income (loss) attributable to PagerDuty, Inc. common stockholders | $9,777 | $(13,242) | $3,280 | $(37,298) | | Diluted EPS | $0.10 | $(0.14) | $0.03 | $(0.40) | [Balance Sheets](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The balance sheets provide a snapshot of PagerDuty's financial position, detailing assets, liabilities, and stockholders' equity | Metric | July 31, 2025 | January 31, 2025 | | :--------------------------- | :------------ | :--------------- | | Total assets | $891,531 | $927,266 | | Total liabilities | $693,850 | $779,221 | | Total stockholders' equity | $180,709 | $129,828 | | Cash and cash equivalents | $339,712 | $346,460 | | Investments | $228,142 | $224,366 | [Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The statements of cash flows detail the sources and uses of cash for operating, investing, and financing activities | Metric | 3 months ended July 31, 2025 | 3 months ended July 31, 2024 | 6 months ended July 31, 2025 | 6 months ended July 31, 2024 | | :------------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $33,974 | $35,769 | $64,644 | $64,416 | | Net cash used in investing activities | $(7,178) | $(3,800) | $(8,860) | $(6,621) | | Net cash used in financing activities | $(59,085) | $(28,944) | $(63,040) | $(35,205) | | Net change in cash, cash equivalents, and restricted cash | $(32,511) | $3,117 | $(7,143) | $22,567 | [Non-GAAP Financial Measures and Reconciliations](index=8&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines PagerDuty's non-GAAP financial measures and provides reconciliations to their GAAP equivalents [Explanation of Non-GAAP Measures](index=8&type=section&id=Explanation%20of%20Non-GAAP%20Measures) This section defines PagerDuty's non-GAAP financial measures and explains the rationale for excluding certain GAAP expenses - Non-GAAP financial measures are presented to provide consistency and comparability with past financial performance and assist in comparisons with other companies[26](index=26&type=chunk) - Key exclusions from non-GAAP measures include stock-based compensation, employer taxes related to employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses, amortization of debt issuance costs, restructuring costs, shareholder matters, adjustment attributable to redeemable non-controlling interest, and income tax effects[28](index=28&type=chunk)[30](index=30&type=chunk)[36](index=36&type=chunk) - Free cash flow is defined as net cash provided by operating activities, less cash used for purchases of property and equipment and capitalization of internal-use software costs[42](index=42&type=chunk) [Reconciliation of Gross Profit and Operating Expenses](index=11&type=section&id=Reconciliation%20of%20Gross%20Profit%20and%20Operating%20Expenses) This section reconciles GAAP gross profit and operating expenses to their non-GAAP counterparts for specified periods | Metric | 3 months ended July 31, 2025 | 3 months ended July 31, 2024 | | :--------------------------- | :--------------------------- | :--------------------------- | | GAAP Gross profit | $104,410 | $95,855 | | Non-GAAP Gross profit | $106,254 | $99,668 | | GAAP Research and development | $30,897 | $35,088 | | Non-GAAP Research and development | $21,119 | $22,755 | | GAAP Sales and marketing | $44,456 | $50,966 | | Non-GAAP Sales and marketing | $38,396 | $42,082 | | GAAP General and administrative | $25,491 | $25,828 | | Non-GAAP General and administrative | $15,332 | $14,720 | [Reconciliation of Operating Income and Net Income](index=13&type=section&id=Reconciliation%20of%20Operating%20Income%20and%20Net%20Income) This section reconciles GAAP operating income and net income to their non-GAAP equivalents, detailing the impact of adjustments | Metric | 3 months ended July 31, 2025 | 3 months ended July 31, 2024 | | :------------------------------------------------------- | :--------------------------- | :--------------------------- | | GAAP Income (loss) from operations | $3,566 | $(16,027) | | Non-GAAP Operating income | $31,407 | $20,111 | | GAAP Net income (loss) attributable to PagerDuty, Inc. common stockholders | $9,777 | $(13,242) | | Non-GAAP Net income attributable to PagerDuty, Inc. common stockholders | $28,276 | $20,331 | | GAAP Diluted EPS | $0.10 | $(0.14) | | Non-GAAP Diluted EPS | $0.30 | $0.21 | [Reconciliation of Free Cash Flow](index=16&type=section&id=Reconciliation%20of%20Free%20Cash%20Flow) This section reconciles net cash from operating activities to free cash flow, detailing deductions for capital expenditures | Metric | 3 months ended July 31, 2025 | 3 months ended July 31, 2024 | | :---------------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $33,974 | $35,769 | | Purchases of property and equipment | $(874) | $(637) | | Capitalization of software costs | $(2,893) | $(1,849) | | Free cash flow | $30,207 | $33,283 | [Additional Information](index=3&type=section&id=Additional%20Information) This section includes important disclaimers regarding forward-looking statements and details for accessing supplemental information [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section provides a standard disclaimer regarding forward-looking statements, outlining associated risks and uncertainties - Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances beyond the company's control[14](index=14&type=chunk) - Factors that could cause actual results to differ materially include the ability to achieve and maintain future profitability, sustain and manage growth, attract and retain customers, compete effectively, adapt to technology, and the impact of global economic conditions[14](index=14&type=chunk) - The company undertakes no intention or obligation to update or revise any forward-looking statements[15](index=15&type=chunk) [Conference Call and Supplemental Information](index=3&type=section&id=Conference%20Call%20and%20Supplemental%20Information) PagerDuty provided details for its Q2 FY26 conference call and webcast, and information on accessing supplemental financial data - PagerDuty hosted a conference call and live webcast for analysts and investors on September 3, 2025, at 2:00 p.m. Pacific Time[11](index=11&type=chunk) - Supplemental financial and other information can be accessed through PagerDuty's investor relations website at investor.pagerduty.com[12](index=12&type=chunk) - PagerDuty uses its investor relations website as the means of complying with its disclosure obligations under Regulation FD[12](index=12&type=chunk)

Core Viewpoint - Precision Drilling Corporation reported stronger than anticipated financial and operational results for the second quarter of 2025, driven by excellent free cash flow, new contracts, and strong demand for its Super Series rig fleet [2][5][21]. Financial Highlights - Revenue for Q2 2025 was $407 million, a decrease of 5.3% from $429 million in Q2 2024, primarily due to lower U.S. and international activity [6][14]. - Adjusted EBITDA was $108 million, down 6.1% from $115 million in the same quarter last year, with a consistent EBITDA margin of 27% [6][21]. - Net earnings attributable to shareholders were $16 million or $1.21 per share, compared to $21 million or $1.44 per share in Q2 2024, marking the 12th consecutive quarter of positive earnings [5][21]. - Cash provided by operations was $147 million, allowing the company to repay $74 million of debt and repurchase $14 million of common shares [7][21]. Operational Highlights - The average number of active drilling rigs in Canada was 50, slightly up from 49 in Q2 2024, while U.S. active rigs averaged 33, down from 36 [8][16]. - Canadian revenue per utilization day increased to $37,725 from $36,075 year-over-year, driven by customer-funded rig upgrades [6][21]. - U.S. revenue per utilization day decreased to $31,113 from $33,227, reflecting lower industry activity [6][21]. - International operations generated $36 million in revenue with seven active rigs, down from eight in Q2 2024 [10][21]. Strategic Initiatives - The company revised its 2025 capital budget to $240 million from $200 million to support upgrades of 22 Super Series rigs, responding to increased customer demand [12][26]. - Precision aims to maximize free cash flow through disciplined capital deployment and enhance shareholder returns via debt reduction and share repurchases [22][26]. - The company is positioned to further adjust capital spending based on evolving customer demand, with a focus on technological advancements in its rig fleet [12][22]. Market Outlook - In Canada, increased takeaway capacity from the Trans Mountain pipeline expansion is expected to support heavy oil activity, while LNG Canada’s first shipment is anticipated to drive demand for Super Triple rigs [27][30]. - In the U.S., natural gas drilling is expected to increase as customers become more optimistic about LNG off-take and AI demand, with a focus on natural gas basins like Haynesville and Marcellus [28][30]. - Internationally, the company maintains a steady level of activity with five rigs in Kuwait and two in Saudi Arabia, under long-term contracts extending into 2027 and 2028 [10][29].

Company Overview - PagerDuty (PD) shares increased by 6.9% to $15.72 in the last trading session, with a higher-than-average trading volume, contrasting with a 1.3% loss over the past four weeks [1] - The company is experiencing strong demand for its AI-enhanced incident management, AIOps, and automation solutions, particularly in managing AI infrastructure and operations [1] Earnings Expectations - PagerDuty is expected to report quarterly earnings of $0.22 per share, reflecting a year-over-year increase of 4.8%, with revenues projected at $123.59 million, up 6.6% from the previous year [2] - However, the consensus EPS estimate for the quarter has been revised down by 33.3% over the last 30 days, indicating a negative trend in earnings estimate revisions, which typically does not lead to price appreciation [3] Industry Context - PagerDuty is part of the Zacks Internet - Software industry, where another company, Phunware (PHUN), saw its shares decrease by 1.2% to $3.21, despite a 6.9% return over the past month [3] - Phunware's consensus EPS estimate remains unchanged at -$0.15, representing a year-over-year change of 53.1%, and it currently holds a Zacks Rank of 3 (Hold) [4]

Company Overview - Precision Drilling Corporation is a leading provider of safe and environmentally responsible services to the energy industry, offering access to an extensive fleet of Super Series drilling rigs [4] - The company has commercialized an industry-leading digital technology portfolio known as Alpha™, which utilizes advanced automation software and analytics to deliver efficient, predictable, and repeatable results for energy customers [4] - Precision also provides well service rigs, camps, and rental equipment, supported by a comprehensive mix of technical support services and skilled personnel [4] Upcoming Financial Results - Precision intends to release its 2025 second quarter results after the market closes on Tuesday, July 29, 2025 [1] - A conference call is scheduled for 11:00 a.m. MT (1:00 p.m. ET) on Wednesday, July 30, 2025, to discuss the results [1] - Participants can register for the conference call to receive a dial-in number and unique PIN for questions [1] Webcast and Replay - The conference call will also be webcast, and a replay will be available on Precision's website for 12 months [2]

PagerDuty (PD) 2025 Conference Summary Company Overview - PagerDuty is described as the most resilient, secure, and scalable digital operations platform for large enterprises and innovative technology companies, evolving from a developer-focused on-call automation tool to a comprehensive incident management platform [2][3] Core Industry Insights - The company emphasizes the growing importance of managing AI operations, highlighting its role in helping both native AI companies and large enterprises ensure the quality, reliability, and security of their AI investments [3] - PagerDuty's platform integrates over 700 ecosystem integrations and utilizes a first-class API to automate the identification and resolution of technology issues, which is crucial as businesses increasingly rely on modern technology stacks [2][3] Financial Performance - Revenue grew by 8%, reaching the top of guidance, marking the best quarter in eight quarters for new customer acquisitions [10][11] - Non-GAAP operating margins were reported at 20%, exceeding guidance, with a clear path to GAAP profitability anticipated in the next fiscal year [19][53] - Free cash flow margins were reported at 24% in Q1, indicating healthy cash flow generation [19] Customer Dynamics - The company faced challenges with enterprise retention, experiencing unexpected downgrades that affected dollar-based net retention, attributed to execution issues rather than systemic problems [11][12] - A significant transition in the enterprise sales team is underway, with a focus on hiring reps with enterprise sales experience and relationships in the CIO and CTO community [12][13] - The commercial segment showed elevated churn, particularly among startups that were overvalued and unable to sustain growth, while interest from well-funded generative AI companies is increasing [44][46] Strategic Initiatives - PagerDuty is evolving its pricing model from a seat-based structure to a consumption-based model, aligning pricing with the value delivered to customers [15][16] - The company is focusing on improving customer engagement and understanding the value realization of its products to reduce churn and enhance retention [35][36] - A share repurchase program of $150 million was announced, reflecting a commitment to returning capital to shareholders while pursuing long-term profitable growth [50][51] Market Environment - The macroeconomic environment remains uncertain, impacting customer behavior and negotiations, with expectations of continued volatility due to geopolitical factors and economic conditions [24][25] - Despite external uncertainties, there is a transformative opportunity in technology, particularly with the adoption of AI, which is driving internal efficiency gains for PagerDuty and its customers [31][32] Leadership and Organizational Changes - The search for a new Chief Revenue Officer (CRO) is ongoing, with a focus on finding a candidate with global enterprise sales experience and a competitive mindset [58][59] - The company is undergoing cultural and operational changes to enhance engagement and performance standards across its sales organization [60][61] Conclusion - PagerDuty is positioned to capitalize on the growing demand for automated incident management solutions, particularly in the context of AI operations, while navigating challenges in customer retention and market volatility. The strategic focus on evolving its sales approach, pricing model, and customer engagement is expected to drive future growth and profitability.