Core Viewpoint - PagerDuty (PD) has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which significantly influences stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based solely on a company's changing earnings picture, with the Zacks Consensus Estimate tracking EPS estimates from sell-side analysts [1][2]. - Changes in future earnings potential, reflected in earnings estimate revisions, are strongly correlated with near-term stock price movements, influenced by institutional investors [4][6]. PagerDuty's Earnings Outlook - For the fiscal year ending January 2025, PagerDuty is expected to earn $0.79 per share, representing a 6.8% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for PagerDuty has increased by 26%, indicating a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of PagerDuty to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting potential for higher stock prices in the near term [10].

Debt Repayment and Liquidity - Precision reduced debt by $176 million in 2024, achieving the mid-point of its debt reduction target range [3] - The company ended 2024 with a cash balance of approximately $74 million, compared to $54 million at year-end 2023 [3] - Total available liquidity at year-end 2024 was approximately $575 million [3] Capital Allocation and Shareholder Returns - Precision remains committed to its long-term debt reduction target of repaying $600 million between 2022 and 2026 [4] - The company returned $75 million to shareholders through share repurchases in 2024, reducing outstanding shares by 4% to 13,779,502 [5] - Since 2015, Precision has allocated $1.5 billion of free cash flow to debt repayments and share buybacks [6] - Annual interest expense decreased to approximately $40 million in 2024 from $104 million in 2016 [6] Financial and Operational Performance - Precision expects to release 2024 fourth quarter results on February 12, 2025, with drilling field margins in Canada and the U.S. aligning with previous guidance [8] - Share-based compensation expense for Q4 2024 is expected to be approximately $15 million, with full-year expense at $47 million [8] - In Canada, Precision maintained an average active rig count of 65 in Q4 2024, with current active rigs at 78 and expected to peak in the low to mid-80s during winter [9] - In the U.S., Precision averaged 34 rigs in Q4 2024, with 32 rigs currently operating and four earning standby revenue [11] - Internationally, Precision has eight active rigs under long-term contracts extending into 2028, with three in Saudi Arabia and five in Kuwait [12] Future Outlook and Strategy - Precision plans to further reduce debt and increase share buyback allocation in 2025, with specific capital allocation plans to be provided in February 2025 [7] - The company expects continued high activity levels for its Well Service business, with 85 to 100 crews projected to be operational in early January 2025 [12] - Precision's CFO highlighted the company's robust free cash flow generation in 2024, driven by increased activity in Canada, international growth, and the integration of CWC Energy Services [13] Company Overview - Precision is a leading provider of drilling services, offering an extensive fleet of Super Series drilling rigs and industry-leading digital technology portfolio known as Alpha [14] - The company's EverGreen suite of environmental solutions enhances its commitment to reducing environmental impact [14] - Precision also offers well service rigs, camps, rental equipment, and technical support services [14]

Core Viewpoint - PagerDuty (PD) has underperformed in the market, with a 15.7% decline year-to-date, contrasting with the Zacks Internet - Software industry's increase of 38.3% and the broader Zacks Computer & Technology sector's return of 35.5% [1] Group 1: Performance and Market Position - The underperformance is linked to ongoing weakness in the Small and Medium-sized Business segment and a challenging macroeconomic environment affecting the Enterprise segment, resulting in longer sales cycles [2] - PD's customer base is expanding, with a notable increase in high-value customers, specifically those spending over $100,000 in Annual Recurring Revenue (ARR), which rose to 825 in Q3 2024, marking a 6% increase year-over-year [3] Group 2: Innovations and Growth Drivers - Growing demand for automation and generative AI has significantly driven PagerDuty's growth, leading to the introduction of AI-driven solutions like PagerDuty Advance in Q3 2024, aimed at improving incident management and response times [4] - The company's AIOps and Automation capabilities contributed over 40% of its net new ARR in Q3 2024, indicating a strong demand for advanced IT operations tools [6] Group 3: Strategic Partnerships - PagerDuty's partnerships with key industry players such as Amazon and Snowflake have bolstered its clientele, with new generative AI and automation features integrated with Amazon Web Services tools to enhance operational efficiency [7][8] Group 4: Financial Guidance - For Q4 2024, PagerDuty anticipates revenues between $118.5 million and $120.5 million, with non-GAAP earnings expected in the range of 15-16 cents per share, reflecting a year-over-year revenue increase of 7.5% [9] - For fiscal 2024, the revenue guidance is set between $464.5 million and $466.5 million, representing an 8% year-over-year growth, with non-GAAP earnings projected at 78-79 cents per share [11] Group 5: Valuation and Investment Potential - PagerDuty's stock is currently viewed as having a stretched valuation, with a Price/Book ratio of 15.83X compared to the industry average of 3.78X, indicating it is not cheap [14] - Despite the valuation concerns, the robust AI portfolio and expanding partner base present attractive investment opportunities, supported by a Zacks Rank 2 (Buy) and a Growth Score of A [15]

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]

Core Insights - PagerDuty reported revenue of $118.95 million for the quarter ended October 2024, marking a year-over-year increase of 9.4% and exceeding the Zacks Consensus Estimate of $116.5 million by 2.10% [1] - The company achieved an EPS of $0.25, up from $0.20 a year ago, resulting in an EPS surprise of 56.25% compared to the consensus estimate of $0.16 [1] Financial Performance Metrics - Total Billings for the quarter were $117.77 million, slightly below the average estimate of $119.39 million from three analysts [3] - The number of Customers reached 15,050, which is in line with the two-analyst average estimate of 15,046 [3] - The Dollar-based Net Retention Rate was reported at 107%, surpassing the average estimate of 106.3% from two analysts [3] Stock Performance - Shares of PagerDuty have returned +13.8% over the past month, outperforming the Zacks S&P 500 composite's +3.8% change [4] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [4]

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 ...