PagerDuty(PD) - 2026 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements 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) 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] - Total liabilities decreased from $779.2 million to $693.9 million, primarily due to the repayment of current convertible senior notes[15] - Total stockholders' equity increased from $129.8 million to $180.7 million[15] Condensed Consolidated Statements of Operations (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] - 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] Condensed Consolidated Statements of Comprehensive Loss (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] Condensed Consolidated Statements of Stockholders' Equity (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] - Additional paid-in capital increased by $48.656 million, reflecting stock option exercises, ESPP issuances, and stock-based compensation[22] Condensed Consolidated Statements of Cash Flows (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] - 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][71] Notes to Condensed Consolidated Financial Statements (unaudited) Note 1. Description of Business and Basis of Presentation - PagerDuty, Inc. provides a digital operations management platform that leverages machine learning for incident response, event management, and automation[32] - 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] Note 2. Summary of Significant Accounting Policies - The Company manages its operations as one operating segment, with the CEO as the chief operating decision maker[40] - No single customer accounted for 10% or more of total accounts receivable or revenue for the periods presented[39] - 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] Note 3. Redeemable Non-Controlling Interest - PagerDuty established a joint venture, PagerDuty K.K., in May 2022, holding a 51% controlling interest[47] 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 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] - 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] Note 5. Fair Value Measurements 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] Note 6. Property and Equipment, Net 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] - 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] Note 7. Deferred Contract Costs - 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] - 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] Note 8. Leases 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] - 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] Note 9. Debt and Financing Arrangements - The Company repaid $57.5 million of its 2025 Convertible Senior Notes in cash during the three months ended July 31, 2025[71] 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] - The 2025 Capped Calls expired in connection with the repayment of the 2025 Notes, while the 2028 Capped Calls remain outstanding[77][78] Note 10. Commitments and Contingencies - The Company is not currently a party to any material legal proceedings and has not incurred significant liabilities related to service-level agreements[79][80] Note 11. Deferred Revenue and Performance Obligations 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] - The Company expects to recognize approximately $295 million (69%) of remaining performance obligations over the next 12 months[85] Note 12. Common Stock and Stockholders' Equity - The Board authorized a new $150.0 million share repurchase program in March 2025, with no shares repurchased as of July 31, 2025[87] - 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] 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 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] Note 14. Income Taxes - 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] - 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] - 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] Note 15. Geographic Information 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] - As of July 31, 2025, 72% of long-lived assets were in the United States, 15% in Canada, and 11% in Portugal[112] Note 16. Subsequent Events - 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 - 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] - The platform collects data from over 700 direct integrations, leveraging AI and machine learning to predict and resolve incidents[119][120] - Revenue is primarily generated from cloud-hosted software subscription fees, with a 'land-and-expand' business model focused on enterprise customers[121][122] Macroeconomic Environment - The company's business and financial performance are subject to global macroeconomic conditions, including inflation, interest rates, and economic uncertainty[123] Key Business Metrics 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] - The number of customers with greater than $100.0 thousand in ARR increased by 5.85% to 868[129] - Dollar-based net retention rate decreased to 102% for the last 12 months ended July 31, 2025, from 106% in the prior year[131] Results of Operations (Three months ended July 31, 2025 compared to three months ended July 31, 2024) Key Financial Highlights (Three months ended July 31, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | 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] - 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] - 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][142][144] 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] Cost of Revenue and Gross Margin - Cost of revenue decreased by $1.079 million, or 5.4%, to $19.001 million for the three months ended July 31, 2025[139] - Gross margin increased to 84.6% for the three months ended July 31, 2025, from 82.7% in the prior year[139] Operating Expenses Operating Expenses (Three months ended July 31, in thousands) | Expense Category | 2025 | 2024 | Change ($) | 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] - Sales and marketing expenses decreased by $6.5 million, driven by reduced personnel costs, outside services, and training/travel[144] Non-Operating Expenses Non-Operating Income (Expenses) (Three months ended July 31, in thousands) | Category | 2025 | 2024 | Change ($) | 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] - The company recorded an income tax benefit of $1.865 million, a significant change from a provision of $0.427 million in the prior year[153] Results of Operations (Six months ended July 31, 2025 compared to six months ended July 31, 2024) Key Financial Highlights (Six months ended July 31, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | 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] - Operating loss significantly narrowed by 82.1% to $(6.761) million, reflecting improved operational efficiency[155] - 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] Revenue - 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] Cost of Revenue and Gross Margin - Cost of revenue decreased by $1.238 million, or 3.1%, to $38.185 million for the six months ended July 31, 2025[160] - Gross margin increased to 84.3% for the six months ended July 31, 2025, from 82.6% in the prior year[160] Operating Expenses Operating Expenses (Six months ended July 31, in thousands) | Expense Category | 2025 | 2024 | Change ($) | 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] - Sales and marketing expenses decreased by $4.964 million, primarily from reduced outside services and personnel costs[162] Non-Operating Expenses Non-Operating Income (Expenses) (Six months ended July 31, in thousands) | Category | 2025 | 2024 | Change ($) | 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] - 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] Non-GAAP Financial Measures - 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][168][169][170][171][172][173][174][175] Non-GAAP gross profit and non-GAAP gross margin 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] Non-GAAP operating income and non-GAAP operating margin 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] Non-GAAP net income attributable to PagerDuty, Inc. common stockholders 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] Free cash flow 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] Liquidity and Capital Resources - As of July 31, 2025, principal sources of liquidity were cash, cash equivalents, and investments totaling $567.9 million[185] - 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] - Deferred revenue was $229.9 million as of July 31, 2025, with $227.0 million expected to be recognized as current revenue[187] - The 2025 Convertible Notes ($57.5 million principal) were repaid in cash during the three months ended July 31, 2025[186] - 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] Sources and Uses of Liquidity - As of July 31, 2025, the Company's liquidity sources included $567.9 million in cash, cash equivalents, and investments[185] Debt and Financing Arrangements - The $57.5 million principal of the 2025 Notes was repaid in cash at maturity during the three months ended July 31, 2025[186] Deferred Revenue - Deferred revenue totaled $229.9 million as of July 31, 2025, with $227.0 million classified as current liability[187] Share Repurchase Programs - The 2025 Share Repurchase Program was increased to $200.0 million in August 2025, with no shares repurchased as of July 31, 2025[189][190] Future Contractual Obligations - 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] Effect of Exchange Rates - 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 $23.0 thousand in the prior year[193] Cash Flow Information Cash Flow Summary (Six months ended July 31, in thousands) | Category | 2025 | 2024 | Change ($) | | :---------------------------------------------------------- | :------- | :------- | :--------- | | 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] Off-Balance Sheet Arrangements - The Company had $1.4 million of irrevocable standby letters of credit outstanding as of July 31, 2025, fully collateralized by restricted cash[199] Critical Accounting Estimates - 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] Recent Accounting Pronouncements - 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][45][46][201] Item 3. Quantitative and Qualitative Disclosures about Market Risk 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] Item 4. Controls and Procedures 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] - No material changes in internal control over financial reporting occurred during the quarter ended July 31, 2025[206] Evaluation of Disclosure Controls and Procedures - The CEO and CFO concluded that disclosure controls and procedures were effective as of July 31, 2025[204] Limitations on the Effectiveness of Controls - The effectiveness of any internal control system is subject to inherent limitations, providing reasonable, not absolute, assurance[205] Changes in Internal Controls Over Financial Reporting - No material changes to internal control over financial reporting were identified during the quarter ended July 31, 2025[206] PART II - OTHER INFORMATION Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 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][212] - No shares were repurchased under the 2025 Share Repurchase Program during the three months ended July 31, 2025[213] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - No defaults upon senior securities were reported[214] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable[215] Item 5. Other Information 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] Item 6. Exhibits 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] 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]