Group 1 - The article highlights potential investment opportunities in lagging companies, specifically mentioning PagerDuty as a candidate for growth in 2025 [1] - The author emphasizes the importance of conducting thorough due diligence before making investment decisions [3][4] - The article reflects a personal interest in the markets and investment management, indicating a focus on long/short equities [1] Group 2 - There is no disclosure of any current stock or derivative positions in the companies mentioned, nor plans to initiate such positions in the near future [2] - The article is presented as a personal opinion without any compensation from the companies discussed [2]

Industry Insights - Cybersecurity is expected to become one of the largest and most critical industries globally in the coming decades due to the rapid adoption of AI-assisted technologies and digital transitions across various sectors [1] Company Analysis - The analysis of companies within the cybersecurity sector is based on growth prospects, utilizing the Discounted Cash Flow (DCF) model to provide insights on cash flow generation under different business models [1]

PagerDuty (PD) reported $118.95 million in revenue for the quarter ended October 2024, representing a year-over-year increase of 9.4%. EPS of $0.25 for the same period compares to $0.20 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $116.5 million, representing a surprise of +2.10%. The company delivered an EPS surprise of +56.25%, with the consensus EPS estimate being $0.16.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Str ...

Financial Data and Key Metrics - Revenue for Q3 2025 was $119 million, up 9% year-over-year [27] - Non-GAAP operating margin expanded to 21% [7] - Net new ARR was $9 million, a 21% increase over Q3 of last year [7] - Total annual recurring revenue (ARR) increased to $483 million, growing 10% year-over-year for the fourth consecutive quarter [7] - Gross margin was 86%, at the high end of the 84% to 86% target range [31] - Operating income was $25 million or 21% of revenue, compared to $15 million or 14% of revenue in the same quarter last year [32] - Cash from operations was $22 million, or 19% of revenue, and free cash flow was $19 million, or 16% of revenue [33] - The company ended the quarter with $542 million in cash, cash equivalents, and investments [34] Business Line Data and Key Metrics - AIOps, Automation, and Customer Service Ops contributed more than 40% to incremental ARR in Q3 [10] - The number of accounts with ARR greater than $500,000 rose by approximately 20% [10] - Dollar-based net retention (DBNR) was 107%, above the Q3 expectation and in line with the full fiscal year expectation [29] - Customers spending over $100,000 in annual recurring revenue grew to 825, up 6% from a year ago [30] - Total paid customers remained relatively flat year-over-year at 15,050 [30] Market Data and Key Metrics - International revenue contributed 28% of total revenues, up from 27% in the year-ago period [27] - EMEA is emerging as a source of stability, building a foundation for higher growth in FY '26 [17] - The Enterprise segment continued to grow above the average, particularly in Software and Technology, Financial Services, and Telecommunications [17] Company Strategy and Industry Competition - The company is focused on converting multi-year, multi-product agreements, which compound benefits in future quarters [9] - PagerDuty Advance, the generative AI offering, is now integrated across the platform to automate triage, expedite incident response, and reduce costs [13] - The company expanded its automation library in Q3, addressing manual, repetitive tasks such as log diagnostics, container management, and database management [15] - Industry analysts recognized PagerDuty as a leader in AIOps, with Forrester including it in the top 25 solutions in its AIOps Landscape report [16] Management Commentary on Operating Environment and Future Outlook - The company is well-positioned to exit FY '25 with ARR growth poised for reacceleration, supported by rising retention, high-caliber sales hiring, and a robust pipeline [23] - Management expects Q4 revenue in the range of $118.5 million to $120.5 million, representing a growth rate of 7% to 8% [37] - For the full fiscal year 2025, the company raised the midpoint of revenue guidance to $464.5 million to $466.5 million, representing a growth rate of 8% [38] - The company anticipates trailing 12-months billings growth to be approximately 9% in Q4 [35] Other Important Information - The company repurchased 3.8 million shares from its $100 million repurchase plan in Q3 [34] - PagerDuty welcomed two new leaders: Rukmini Reddy, SVP of Engineering, and Pritesh Parekh, Chief Information Security Officer [21] - The company was recognized as a top 25 company for Women by Fortune's Best Workplaces and received validation from the Science Based Targets initiative for its carbon reduction commitments [22] Q&A Session Summary Question: Why is PagerDuty's revenue growth in the high-single digits while adjacent markets are growing in double digits? - Answer: The company saw stabilization across all segments, including Commercial, and improved dollar-based net retention. However, large deal conversions were slower than expected, deferring some ARR acceleration to FY '26 [46][47] Question: What is the customer adoption strategy for PagerDuty Advance, and what pricing uplift is expected? - Answer: PagerDuty Advance is integrated across the platform to reduce incident response time and costs. The company expects pricing power through differentiation in generative AI use cases [49][52] Question: What are the commonalities in large enterprise customer conversions, and why were some deals pushed? - Answer: The company is focusing on pipeline generation, rigorous pipeline management, and executive sponsorship to improve large deal conversions. Some large deals were deferred but not lost [61][65] Question: How does the company balance growth and profitability given its target operating model? - Answer: The company is focused on reaccelerating growth while maintaining operating margins. Investments in sales and capacity are being made to capture more business in the market [86][89] Question: What is driving the improvement in EMEA, and how should we think about FY '26? - Answer: A new leader in EMEA has brought rigor and focus, leading to improved execution. The company expects ARR and billings growth of over 10% in FY '26 [95][96] Question: What are the drivers for the Commercial segment, and how much is tied to employment in the tech sector? - Answer: The Commercial segment is stabilizing, with better retention and competitive win rates. The company is not waiting for employment to improve and sees strength in subsegments like generative AI startups and crypto [97][99] Question: How does the ACV expansion of large deals look relative to NRR or large deals in general? - Answer: The ACV expansion varies by customer, but multiproduct adoption leads to higher value and retention. Customers adopting more of the Operations Cloud see significant ROI [132][133] Question: How has pipeline visibility improved, and what is the deal composition? - Answer: Pipeline visibility has significantly improved, with deals stretching into Q3 of next year. The sales team focuses on larger deals, particularly above $500,000, which cover more products and demonstrate more value [135][137] Question: How does linearity within Q4 look, and is there a risk of larger deals being pushed into next year? - Answer: Linearity in Q4 is expected to be normal, with the third month being the biggest. The company has processes in place to balance linearity, but holiday periods can affect North America [146][147] Question: What does the customer journey typically look like for large deals, and how long is the engagement? - Answer: Large deals usually start small and grow through expansion. The company focuses on solution selling and attaching services to deals, which provides better visibility and growth opportunities [148][150]

Core Viewpoint - PagerDuty reported quarterly earnings of $0.25 per share, exceeding the Zacks Consensus Estimate of $0.16 per share, marking a 56.25% earnings surprise [1] - The company has consistently surpassed consensus EPS estimates over the last four quarters [2] Financial Performance - PagerDuty's revenues for the quarter ended October 2024 were $118.95 million, surpassing the Zacks Consensus Estimate by 2.10% and up from $108.72 million a year ago [2] - The current consensus EPS estimate for the upcoming quarter is $0.16 on revenues of $121.41 million, and for the current fiscal year, it is $0.70 on revenues of $466.75 million [8] Stock Performance - PagerDuty shares have declined approximately 10.8% since the beginning of the year, while the S&P 500 has gained 25.5% [4] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations of outperforming the market in the near future [7] Industry Outlook - The Internet - Software industry is currently ranked in the top 14% of over 250 Zacks industries, suggesting a favorable outlook for companies within this sector [9] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [6]

A brief update from my last coverage on PagerDuty (NYSE: PD ). I rated a buy rating in July this year, and my key thesis was that PD offers a strong value proposition to businesses, and it should see I'm a passionate investor with a strong foundation in fundamental analysis and a keen eye for identifying undervalued companies with long-term growth potential. My investment approach is a blend of value investing principles and a focus on long-term growth. I believe in buying quality companies at a discount to ...

The price trend for PagerDuty (PD) has been bearish lately and the stock has lost 10.7% over the past two weeks. However, the formation of a hammer chart pattern in its last trading session indicates that the stock could witness a trend reversal soon, as bulls might have gained significant control over the price to help it find support. While the formation of a hammer pattern is a technical indication of nearing a bottom with potential exhaustion of selling pressure, rising optimism among Wall Street analys ...

PagerDuty (PD) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change. The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system. The power o ...

Two cloud-related stocks are putting pressure on the sector today. Zscaler Inc (NASDAQ:ZS) and PagerDuty Inc (NYSE:PD) are down 16% and 1.5%, respectively, after each company's rather lackluster turn in the earnings confessional. ZS was last seen trading at $161.78, on track for its worst single-session percentage decline since September 2019. Even though the cloud security company reported a top-line beat for the fiscal fourth quarter, its full-year and first-quarter guidance fell short of analyst estimate ...

Michael Vi Investment Thesis IT Operations cloud software company PagerDuty (NYSE:PD) reported its Q2 earnings report for the FY25 fiscal year, which showed some encouraging signs of troubles in its IT Operations software business bottoming. The San Francisco, CA-based cloud software company has endured a difficult transitory period as has the larger cloud software environment as CIOs and CSOs have allocated a higher share of their IT budgets towards GenAI while sidelining software-focused projects in the p ...