Debt and Financial Obligations - The Term Loan Agreement matures on July 1, 2029, with additional agreements maturing on April 1, 2030, and October 1, 2029, indicating a structured debt repayment schedule [189]. - The company expects to continue utilizing debt for operations, which may increase vulnerability to economic downturns and affect operational flexibility [190]. - The company’s credit facilities are concentrated with JPMorgan, following the acquisition of First Republic, which could pose risks if financial institutions face instability [191]. - There is a concentration of credit risk due to account balances exceeding FDIC insurance coverage of $250,000 per depositor, potentially impacting liquidity [192]. - The company may face challenges in complying with financial covenants in Loan Agreements, which could limit operational flexibility and lead to defaults [196]. - The company’s obligations under Loan Agreements are secured by substantially all assets, which could lead to significant consequences in the event of a default [196]. - The company’s ability to access funding sources may be impaired by factors affecting the financial institutions it relies on, impacting overall business operations [194]. - The company has approximately 12.7 million shares of Class A common stock issuable upon exchange of Class B and Class C units, which will be eligible for resale subject to certain restrictions [327]. - As of March 31, 2025, the company had $193.1 million in borrowings outstanding under Loan Agreements, with an annual interest rate of 6.25% on the Term Loan Agreement and 6.00% on the Revolving Loan Agreement [506]. - A 100 basis point increase in interest rates is estimated to result in an increased interest expense of approximately $0.9 million over the next 12 months [507]. Investment Performance and Risks - The performance of investments in specialized funds and customized accounts directly affects management revenue, with poor performance leading to decreased earnings and capital raising difficulties [206]. - Defaults by clients or investors in specialized funds could adversely affect fund operations and performance, particularly during economic uncertainty [201]. - The risk of clawback obligations exists if previously distributed carried interest exceeds amounts ultimately entitled, which could affect financial stability [206]. - The company's cash flow may fluctuate significantly due to sporadic and unpredictable distributions of carried interest, impacting steady earnings growth [207]. - Carried interest distributions may decrease in volatile economic environments, making it difficult to predict timing and amounts, leading to increased stock price volatility [208]. - Redemption or repurchase rights in evergreen funds may adversely affect revenues, especially during declining market conditions [209]. - Sustained redemption requests could exhaust liquidity sources, forcing the company to dispose of investments sooner than anticipated, potentially reducing carried interest [211]. - Valuation methodologies for specialized funds can be highly subjective, leading to significant losses if fair values are not realized [213]. - Investments in high-risk, illiquid assets may result in losses or failure to realize profits for extended periods [217]. - Portfolio companies may experience financial difficulties during market downturns, adversely affecting investment returns [220]. - The company may pursue complex investment opportunities that involve regulatory and legal risks, potentially impacting returns [221]. - Lack of diversification in specialized funds could lead to significant adverse impacts on investment performance [223]. Regulatory and Compliance Risks - The company is subject to extensive government regulation, and changes in laws or regulations could impose additional expenses or limit fundraising activities [282]. - The SEC has increased scrutiny on the asset management and private equity industries, focusing on fees, expense allocations, and disclosures, which may affect the company's operations [289]. - The company is subject to various international regulations, including the AIFMD in the EU, which may impose additional compliance burdens and affect its ability to operate [298]. - Compliance with MiFID II has resulted in increased complexity and higher operational costs for the company [299]. - New prudential regulations in the EU and U.K. could hinder the company's capital deployment and recruitment efforts [300]. - Regulatory requirements aimed at enhancing retail investor protection may impose additional operational costs and limit access to capital from retail investors [301]. - Non-compliance with existing or new laws and regulations could have a material adverse effect on the company's financial condition and operations [302]. - The company faces increasing scrutiny and demands regarding ESG matters from investors and regulators, which may impact return potential and fundraising capabilities [303]. - Certain investors are focusing on ESG integration, potentially hampering return potential and leading to operational complexities and costs [303]. - Regulatory penalties related to insufficient compliance with ESG laws could adversely affect profitability and reputation [304]. - Climate change risks, including compliance costs and regulatory actions, may negatively impact returns for the company and its portfolio companies [305]. - Enhanced disclosure obligations due to climate-related regulations could increase compliance costs and administrative burdens [306]. - The company relies on third-party data for ESG-related reporting, and inaccuracies in this data could harm its reputation and lead to enforcement actions [264]. - Legal liabilities related to investment management activities are increasing, with potential for significant damages from claims of misleading statements or negligent conduct [254][255]. Operational and Cybersecurity Risks - The company faces significant challenges in maintaining adequate financial and operational controls, which may lead to increased expenses and resource commitments [228]. - Operational risks, including technology failures and cybersecurity threats, could disrupt business and result in financial losses [236]. - The company relies on secure processing and storage of sensitive information, with potential cybersecurity threats posing significant risks [237]. - Unauthorized access and data breaches could lead to material financial losses and reputational damage for the company [240]. - The company faces increased compliance costs and potential regulatory liabilities due to rapidly evolving data security and privacy laws, including GDPR and CPRA, which could lead to significant penalties [241][245]. - Compliance obligations are expanding, requiring adherence to various international data protection laws, which may increase operational complexities and costs [243][244]. - There is a heightened risk of data theft or compromise, particularly in jurisdictions with weaker protections for intellectual property and sensitive information [256][258]. - The company may face challenges in managing international operations, including compliance with diverse regulatory environments and potential currency fluctuations [256][259]. Market and Economic Risks - A pandemic or global health crisis could materially impact the company's business, financial condition, and results of operations, exacerbating existing risks [265]. - The company may experience reduced revenue and cash flow during economic downturns or tightening global credit markets, leading to potential write-downs of investment valuations [277]. - Market volatility and geopolitical conflicts, such as the ongoing war between Russia and Ukraine, contribute to uncertainty and could negatively impact investment valuations [273]. - The company may face challenges in fundraising efforts due to negative international reactions to U.S. trade policies, potentially affecting client relationships [274]. - Operational risks from another pandemic include employee illness and compliance challenges, which could reduce productivity and increase costs [267]. Tax and Financial Management - HLA, the company's primary asset, is required to make substantial tax distributions to members, which may exceed actual tax liabilities [320]. - Tax distributions from HLA are based on an assumed tax rate, likely leading to distributions that significantly exceed actual tax obligations [321]. - Payments under the tax receivable agreement could be substantial and may negatively impact liquidity if they exceed actual cash savings [316]. - The company may not be reimbursed for payments made under the tax receivable agreement if the IRS challenges the tax basis increases [319]. - The company's effective tax rate and liabilities are subject to complex interpretations of current tax laws, which could lead to increased tax liabilities if challenged by authorities [285]. - Changes in U.S. tax laws could impact the company's tax liabilities and increase regulatory compliance costs, with uncertain timing and details [284]. Corporate Governance and Shareholder Relations - The company expects to continue paying dividends to stockholders, but this is subject to the discretion of the board of directors and various legal limitations [329]. - The company’s ability to declare and pay dividends is subject to Delaware law, which may limit the amount of funds available for dividends [329]. - Anti-takeover provisions in the company’s charter documents may make it more difficult for stockholders to replace current management, potentially affecting the market price of Class A common stock [330]. - The disparity in voting rights between Class A and Class B common stock may adversely affect the price of Class A common stock, as Class B stockholders have superior voting rights [324]. - The company’s management fees are generally based on commitments or net invested capital, which are not significantly impacted by changes in investment values [504]. - Management fees from specialized funds and customized separate accounts are based on the amount of capital committed or invested, not significantly affected by changes in fair value [508]. - Incentive fees from specialized funds are based on realized gains and performance criteria, not materially affected by unrealized investment fair value changes [508]. - The company limits counterparties in financial transactions to reputable financial institutions to minimize credit risk exposure [509]. - There have been no material changes in market risk exposures since March 31, 2024 [510].

Financial Performance - Annual Recurring Revenue (ARR) increased to $496.0 million as of April 30, 2025, up from $463.4 million in 2024, representing a growth of 7.8%[119] - Revenue for the three months ended April 30, 2025, was $119.8 million, an increase of $8.6 million or 7.8% from $111.2 million in the same period of 2024[126] - Gross profit for the same period was $100.6 million, resulting in a gross margin of 84.0%, up from 82.6% in 2024[123] - Non-GAAP gross profit increased from $96.036 million in 2024 to $103.029 million in 2025, with a non-GAAP gross margin of 86.0%[155] - Non-GAAP operating income increased from $15.329 million in 2024 to $24.359 million in 2025, resulting in a non-GAAP operating margin of 20.3%[157] - Non-GAAP net income attributable to PagerDuty, Inc. common stockholders for the three months ended April 30, 2025, was $22,679,000, compared to $16,005,000 for the same period in 2024, representing a 41.5% increase[159] Customer Metrics - The total number of customers reached 15,247 as of April 30, 2025, compared to 15,120 in 2024, with customers generating over $100,000 in ARR increasing to 848 from 811[120] - The dollar-based net retention rate was 104% for the last 12 months ended April 30, 2025, down from 106% in 2024, indicating a slight decline in customer retention[122] Operating Expenses - Operating expenses totaled $110.9 million for the three months ended April 30, 2025, down from $113.6 million in 2024, with a notable decrease in research and development expenses[123] - Research and development expenses decreased by $3.475 million, or 9.3%, from $37.523 million in 2024 to $34.048 million in 2025[131] - Sales and marketing expenses increased by $1.546 million, or 3.2%, from $48.499 million in 2024 to $50.045 million in 2025[134] - General and administrative expenses decreased by $0.685 million, or 2.5%, from $27.540 million in 2024 to $26.855 million in 2025[135] - Total operating expenses decreased by $2.614 million, or 2.3%, from $113.562 million in 2024 to $110.948 million in 2025[130] Cash Flow and Liquidity - Free cash flow for the three months ended April 30, 2025, was $28,986,000, up from $27,098,000 in 2024, reflecting a 7.0% increase[161] - As of April 30, 2025, the company had cash and cash equivalents totaling $597.1 million, which is expected to support working capital and capital expenditure requirements for at least the next 12 months[162] - Net cash provided by operating activities increased by $2,023,000, from $28,647,000 in 2024 to $30,670,000 in 2025, driven by a 7.8% increase in revenue[168] - Net cash used in investing activities decreased by $1,139,000, from $2,821,000 in 2024 to $1,682,000 in 2025[168] Debt and Share Repurchase - The company’s total debt obligations as of April 30, 2025, amounted to $451.4 million, with $57.5 million classified as short-term[167] - The company announced a share repurchase program in March 2025, authorizing up to $150.0 million for repurchases, with no shares repurchased as of April 30, 2025[165] - The company repurchased 5,223,071 shares under the 2024 Share Repurchase Program at an average price of $19.15, totaling $100.0 million[166] Other Financial Metrics - The net loss attributable to PagerDuty, Inc. was $7.2 million for the three months ended April 30, 2025, compared to a net loss of $17.1 million in the same period of 2024[123] - Cost of revenue decreased to $19.2 million in 2025 from $19.3 million in 2024, contributing to improved gross margin[129] - Interest income decreased by $0.969 million, or 13.9%, from $6.980 million in 2024 to $6.011 million in 2025[137] - Interest expense increased by $0.216 million, or 10.1%, from $2.148 million in 2024 to $2.364 million in 2025[139] - The provision for income taxes increased by $0.620 million, or 321.2%, from $0.193 million in 2024 to $0.813 million in 2025[137] - The company expects research and development expenses to generally increase in dollar value as the business grows[130] Operational Capabilities - The company continues to focus on expanding its enterprise customer base, which constitutes the majority of its revenue[112] - PagerDuty's platform integrates with over 700 systems, enhancing its operational capabilities and customer service offerings[111] - Foreign exchange positively impacted cash by $335,000 in the three months ended April 30, 2025, compared to a negative impact of $115,000 in the same period in 2024[174]

Financial Performance - Net revenue for the first quarter of fiscal 2026 was $1.9 billion, a 63% increase compared to $1.16 billion in the first quarter of fiscal 2025[88][106]. - Operating income for the three months ended May 3, 2025, was 14.3%, compared to a loss of 13.1% in the same period of the previous year[104]. - Cost of goods sold increased to $942.9 million for the three months ended May 3, 2025, up 48.9% from $633.1 million in the same period of 2024, with gross profit rising to $952.4 million, an 80.4% increase[107]. - Research and development expenses rose to $507.7 million, a 6.6% increase from $476.1 million, representing 26.8% of net revenue compared to 41.0% in the prior year[108]. - Selling, general and administrative expenses decreased to $186.4 million, down 6.8% from $199.9 million, accounting for 9.8% of net revenue compared to 17.2% in the previous year[109]. - A net restructuring gain of $12.3 million was recognized, compared to a gain of $4.1 million in the prior year, reflecting efforts to enhance operational efficiency[110]. Market Performance - Sales from the data center end market increased by 76%, while the carrier infrastructure end market saw a 93% increase, enterprise networking increased by 16%, and consumer end market increased by 50%[88][106]. - The automotive/industrial end market experienced a 2% decrease in sales[88][106]. - Sales to customers with operations in Asia represented approximately 74% of net revenue for the three months ended May 3, 2025[100]. Cash Flow and Investments - Cash provided by operating activities was $332.9 million for the three months ended May 3, 2025, compared to $324.5 million in the same period of 2024[125][126]. - Net cash used in investing activities was $94.1 million, primarily for property and equipment purchases totaling $118.8 million[127]. - Net cash used in financing activities amounted to $301.2 million, mainly due to $340.0 million in common stock repurchases and $51.8 million in quarterly dividend payments[128]. - The company repurchased 5.6 million shares for $340 million during the three months ended May 3, 2025, with $2.2 billion remaining for future repurchases[96]. - Cash and cash equivalents were $885.9 million as of May 3, 2025, a decrease of $62.4 million from $948.3 million on February 1, 2025[97]. Taxation and Compliance - The company continues to benefit from lower income tax rates in certain jurisdictions, although changes in international taxation could reduce these benefits[92]. - Provision for income taxes was $38.0 million, a 113.5% increase from $17.8 million, influenced by various tax rate factors and adjustments[112]. - The company incurred $74.1 million for tax withholding payments on behalf of employees for net share settlements[129]. Debt and Financing - Total borrowings outstanding as of May 3, 2025, were $4.3 billion, with $1.3 billion due within twelve months[117]. - The company repaid $21.9 million in debt principal[129]. - For the three months ended May 4, 2024, net cash used in financing activities was $325.7 million, including $150.0 million for common stock repurchases and $51.8 million for quarterly dividends[129]. Risk Management - A hypothetical 1 percentage point increase in interest rates could result in an increase in annual interest expense by approximately $6.2 million[131]. - If the U.S. dollar weakened by 10%, operating expenses could increase by approximately 2%[135]. - The company maintains an investment policy that limits long-term interest rate risk by requiring effective maturities of generally less than five years[132]. - The majority of sales and expenses are denominated in U.S. dollars, but a portion of international operational expenses is in foreign currencies, exposing the company to exchange rate volatility[133]. - The company may enter into foreign currency forward and option contracts to mitigate foreign exchange risks associated with certain transactions[134].

Home Sales Performance - Home sales revenue decreased by 5.3% to $650.3 million for the three months ended April 30, 2025, compared to $686.9 million for the same period in 2024[118]. - The average price per home decreased by 5.5% to $506,081 for the three months ended April 30, 2025, down from $535,408 in the same period of 2024[126]. - Net contracts decreased by 7.5% for the three months ended April 30, 2025, primarily due to macroeconomic uncertainty affecting consumer confidence[122]. - Contract backlog decreased to 1,711 homes as of April 30, 2025, down from 2,018 homes a year earlier, representing a 12.5% decrease in dollar value to $988.2 million[124]. - The number of homes delivered increased by 0.2% to 1,285 for the three months ended April 30, 2025, compared to 1,283 in the same period of 2024[127]. - Sale of homes for the three months ended April 30, 2025, was $650.3 million, a decrease from $686.9 million in the same period of 2024[133]. Financial Performance - Income before income taxes decreased to $26.5 million for the three months ended April 30, 2025, compared to $69.4 million for the same period in 2024[121]. - Gross margin percentage decreased to 13.8% for the three months ended April 30, 2025, down from 19.5% in the same period of 2024[119]. - Selling, general and administrative expenses increased by $4.6 million to $51.1 million for the three months ended April 30, 2025[137]. - Income before income taxes in the Northeast for the three months ended April 30, 2025 was $31.4 million, a decrease of $0.3 million compared to the prior year[145]. - Income before income taxes in the Southeast decreased by $26.7 million to $0.4 million for the three months ended April 30, 2025[149]. - Income before income taxes in the West decreased by $16.7 million to $18.9 million for the three months ended April 30, 2025[153]. - Financial services income before income taxes increased to $8.4 million for the three months ended April 30, 2025, compared to $5.1 million in the prior year[157]. Inventory and Costs - Total inventory increased by $42.4 million to $1.5 billion at April 30, 2025, driven by new land purchases and development[181]. - Cost of sales, excluding interest expense and land charges, was $537.6 million for the three months ended April 30, 2025, compared to $531.4 million in 2024[133]. - The total cost of sales, excluding interest expense and land charges, was 82.7% for the three months ended April 30, 2025, compared to 77.4% in 2024[134]. - Construction costs represented approximately 50.2% of the homebuilding cost of sales for the six months ended April 30, 2025[191]. Market Conditions and Risks - The company continues to utilize quick move-in homes to address affordability challenges in the current market environment[114]. - The company continues to face risks related to rising construction costs and potential impacts on gross margins due to inflation and economic conditions[190]. - The annual inflation rate in the U.S. was 2.3% in April 2025, significantly lower than its peak of 9.1% in June 2022, which may impact home sale prices[190]. Liquidity and Financing - The company spent $467.4 million on land purchases and development during the six months ended April 30, 2025, while maintaining total liquidity of $202.4 million[117]. - Total liquidity at April 30, 2025 was $202.4 million, including $74.0 million in cash and $125.0 million of borrowing capacity[162]. - The company’s long-term debt as of April 30, 2025, totals $854.968 million, with a weighted average interest rate of 10.21%[198]. - Nonrecourse mortgage loans totaled $78.1 million at April 30, 2025, with a weighted-average interest rate of 8.2%[174]. - Senior notes and credit facilities net of discounts were $864.3 million as of April 30, 2025[168]. Joint Ventures and Share Repurchases - The company has 27 unconsolidated joint ventures with a total of 5,002 homes, indicating ongoing collaboration in homebuilding[184]. - The company repurchased 257,908 shares for a market value of $30.1 million at an average price of $116.70 per share during the six months ended April 30, 2025[178]. - The company had $30.6 million authorized for stock repurchases as of April 11, 2025[177]. Community and Sales Dynamics - As of April 30, 2025, the company has a total of 42,447 homes across 125 active selling communities, with 12,627 homes actively selling and 29,820 homes proposed[184]. - The number of active selling communities decreased from 130 on October 31, 2024, to 125 on April 30, 2025, reflecting a slight contraction in market presence[187]. - The total number of unsold homes increased from 1,106 on October 31, 2024, to 1,132 on April 30, 2025, indicating a decrease in sales pace during the second quarter of fiscal 2025[187]. Financial Services Performance - Financial services revenue increased by 24.2% to $21.3 million for the three months ended April 30, 2025, compared to $17.2 million for the same period in 2024[125]. - Financial services assets decreased by $42.0 million to $161.6 million as of April 30, 2025, primarily due to a reduction in the volume of loans originated[188]. - Financial services liabilities also decreased by $42.6 million to $140.6 million at April 30, 2025, correlating with the decrease in mortgage loans held for sale[189]. Impairments and Cancellations - Inventory impairments totaled $3.1 million for the three months ended April 30, 2025, compared to $0.2 million in the same period of 2024[136]. - Contract cancellation rate for the first quarter of 2025 was 16%, up from 14% in 2024[139].

Home Sales Performance - Home sales revenue decreased by 5.3% to $650.3 million for the three months ended April 30, 2025, compared to $686.9 million for the same period in 2024[118]. - The average price per home decreased by 5.5% to $506,081 for the three months ended April 30, 2025, down from $535,408 in the same period of 2024[126]. - Net contracts decreased by 7.5% for the three months ended April 30, 2025, primarily due to macroeconomic uncertainty affecting consumer confidence[122]. - Contract backlog decreased to 1,711 homes as of April 30, 2025, down from 2,018 homes a year earlier, representing a 12.5% decrease in dollar value to $988.2 million[124]. - Sale of homes for the three months ended April 30, 2025, was $650.3 million, a decrease from $686.9 million in the same period of 2024[133]. - Contract cancellation rate for the first quarter of 2025 was 16%, up from 14% in 2024[139]. Financial Performance - Income before income taxes decreased to $26.5 million for the three months ended April 30, 2025, compared to $69.4 million for the same period in 2024[121]. - Gross margin percentage decreased to 13.8% for the three months ended April 30, 2025, down from 19.5% in the same period of 2024[119]. - Homebuilding gross margin decreased to 13.8% and 14.5% for the three and six months ended April 30, 2025, compared to 19.5% and 18.9% for the same periods in 2024[134]. - Selling, general and administrative expenses increased by $4.6 million to $51.1 million for the three months ended April 30, 2025[137]. - Income from unconsolidated joint ventures decreased by $2.1 million to $9.0 million for the three months ended April 30, 2025, primarily due to losses from two joint ventures[160]. - Corporate general and administrative expenses decreased to $29.5 million for the three months ended April 30, 2025, down from $32.5 million for the same period in the prior year, mainly due to lower stock compensation expenses[158]. Operational Metrics - The number of homes delivered increased by 0.2% to 1,285 for the three months ended April 30, 2025, compared to 1,283 in the same period of 2024[127]. - Net contracts per active selling community decreased to 11.2 and 20.8 for the three and six months ended April 30, 2025, from 13.9 and 24.2 in the prior year[138]. - Total home sites available increased due to acquiring new land parcels, partially offset by home deliveries[183]. - As of April 30, 2025, the company has a consolidated total of 42,447 homes across 125 active selling communities, with 12,627 homes actively selling and 29,820 homes proposed[184]. - The total unsold homes increased from 1,106 on October 31, 2024, to 1,132 on April 30, 2025, reflecting a decrease in sales pace during the second quarter of fiscal 2025[187]. Regional Performance - Homebuilding revenue in the Northeast increased by 29.2% to $257.3 million for the three months ended April 30, 2025, driven by a 36.0% increase in homes delivered[144]. - Income before income taxes in the Northeast decreased slightly by 1.0% to $31.4 million for the three months ended April 30, 2025, primarily due to a $1.7 million increase in selling, general and administrative expenses[145]. - Homebuilding revenue in the Southeast decreased by 42.0% to $74.7 million for the three months ended April 30, 2025, attributed to a 37.8% decrease in homes delivered[148]. - Income before income taxes in the Southeast dropped significantly by 98.6% to $0.4 million for the three months ended April 30, 2025, due to decreased homebuilding revenue and a significant decrease in gross margin percentage[149]. - Homebuilding revenue in the West decreased by 8.0% to $332.4 million for the three months ended April 30, 2025, impacted by a 3.4% decrease in homes delivered[152]. - Income before income taxes in the West decreased by 46.8% to $18.9 million for the three months ended April 30, 2025, primarily due to decreased homebuilding revenue and increased selling, general and administrative expenses[153]. Liquidity and Investments - The company spent $467.4 million on land purchases and development during the six months ended April 30, 2025, while maintaining total liquidity of $202.4 million[117]. - Total liquidity as of April 30, 2025, was $202.4 million, including $74.0 million in cash and cash equivalents and $125.0 million of borrowing capacity under the senior secured revolving credit facility[162]. - Cash used in operations was $33.6 million after spending $467.4 million on land and land development in the first half of fiscal 2025[164]. - Investments in unconsolidated joint ventures increased by $40.6 million to $183.5 million as of April 30, 2025, compared to October 31, 2024[180]. - The company repurchased 257,908 shares for a market value of $30.1 million at an average price of $116.70 per share during the six months ended April 30, 2025[178]. Debt and Financing - Senior notes and credit facilities, net of discounts, totaled $864.3 million as of April 30, 2025, down from $896.2 million at October 31, 2024[168]. - The company has 400,000 in long-term debt maturing in 2028 and 430,000 maturing in 2029, with a total long-term debt of $854.968 million as of April 30, 2025[198]. - The weighted average interest rate on long-term fixed-rate debt is 10.21% as of April 30, 2025[198]. - Cash used in financing activities was $81.0 million during the first half of fiscal 2025, primarily due to the redemption of 13.5% Senior Notes[164]. Market Conditions - The annual inflation rate in the U.S. was 2.3% in April 2025, significantly lower than its peak of 9.1% in June 2022, impacting home sales prices[190]. - Construction costs represented approximately 50.2% of the homebuilding cost of sales for the six months ended April 30, 2025[191]. - The company continues to utilize quick move-in homes to address affordability challenges in the current market environment[114].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 000-55654 NUTRIBAND INC. (Exact name of registrant as specified in its charter) | NEVADA | 81-1118176 | | --- | --- | | (State ...

Financial Performance - Total royalty income for the second quarter of fiscal 2025 was $2,471,301, representing a 10.7% increase compared to $2,232,767 in the second quarter of fiscal 2024[39] - Net income for the second quarter of fiscal 2025 was $2,261,006, an increase of 11.2% from $2,033,899 in the second quarter of fiscal 2024[39] - In the first six months of fiscal 2025, total royalty income increased to $2,976,298, up 12.0% from $2,657,677 in the first six months of fiscal 2024[49] - Trust interest income increased to $32,960 in the first six months of fiscal 2025 compared to $23,793 in the same period of fiscal 2024[53] Royalty and Gas Sales - Natural gas accounted for approximately 92% of the cumulative royalty income received in fiscal 2025[27] - Gas sales for the six months ended 3/31/2025 decreased by 6.1% to 6.062 Bcf compared to 6.459 Bcf in the previous period[52] - Gas sales from western Oldenburg accounted for 29.7% of total gas sales from the Oldenburg concession, contributing approximately 81.8% of all royalties attributable to gas sales[52] - The effective royalty rate on gas sold from western Oldenburg is approximately seven times higher than that from eastern Oldenburg, significantly impacting the Trust's royalty income[45] Expenses and Distributions - Trust expenses for the second quarter of fiscal 2025 increased by 6.7% to $229,519 from $215,201 in the second quarter of fiscal 2024[46] - Trust expenses for the first six months of fiscal 2025 decreased by 1.1%, or $5,002, to $463,484 from $468,486 in the same period of fiscal 2024[53] - The Trust's distribution per unit remained unchanged at $0.20 for the second quarter of fiscal 2025[39] Gas Prices - The average gas price under the Mobil Agreement increased by 10.8% to $14.11 per Mcf in the first calendar quarter of 2025[41] - Gas prices increased by 4.6% to 4.1894 Ecents/Kwh from 4.0068 Ecents/Kwh[52] - Gas prices ($/Mcf) increased by 3.2% to $12.73 from $12.33[52] - Gas prices ($/Mcf) for the OEG Agreement increased by 10.9% to $14.08 from $12.70[52] Future Outlook and Operations - EMPG indicated that it will not be drilling any wells during 2025, focusing instead on workovers and maintenance to manage production decline[55] - The Trust's forward-looking statements are subject to risks including depletion of assets and geopolitical uncertainties[57] Royalty Calculations - The Trust's independent accountants will commence their examination of royalty calculations for 2023 and 2024 in October 2025[28]

Financial Performance - GAAP diluted earnings per share were $2.27, an increase of 11.7% from $2.03 in the prior year, while adjusted diluted earnings per share decreased by 35.9% to $1.30[56] - Net sales for the quarter were $23.8 billion, a decrease of 2.8% compared to the same period last year, with comparable sales down 3.8%[61] - Operating income increased by 13.6% to $1.5 billion, benefiting from $593 million in pretax net gains related to interchange fee settlements[61] - Net earnings for the three months ended May 3, 2025, were $1,036 million, a 10.0% increase from $942 million for the same period in 2024[84] - EBIT increased to $1,498 million, reflecting a 13.0% growth compared to $1,325 million in the prior year[84] - EBITDA for the quarter was $2,285 million, up 11.9% from $2,043 million year-over-year[84] Margins and Returns - The gross margin rate was 28.2%, down from 28.8% in the prior year, reflecting higher markdown rates and increased supply chain costs[74] - The after-tax return on invested capital (ROIC) for the trailing twelve months was 15.1%, slightly down from 15.4% in the previous year[57] - After-tax return on invested capital was 15.1% for the trailing twelve months ended May 3, 2025, slightly down from 15.4% in the previous year[87] Cash Flow and Liquidity - Operating cash flows were $300 million for the three months ended May 3, 2025, down from $1,100 million in the same period last year[91] - Cash and cash equivalents stood at $2.9 billion as of May 3, 2025, compared to $3.6 billion a year earlier[90] - Dividends paid totaled $510 million ($1.12 per share) for the quarter, a 1.8% increase from $508 million ($1.10 per share) in the prior year[94] - The company repurchased shares worth $251 million during the three months ended May 3, 2025[95] Inventory and Sales Dynamics - Inventory as of May 3, 2025, was $13.0 billion, an increase from $12.7 billion in February 2025 and $11.7 billion in May 2024, attributed to lower-than-expected sales[92] - Comparable digitally-originated sales increased by 4.7%, while comparable stores-originated sales declined by 5.7%[61] Tax and Compliance - The effective income tax rate rose to 25.0% from 22.7% in the prior year, primarily due to discrete tax expenses related to share-based compensation[78] Store Operations and Strategy - The company opened 3 new stores, bringing the total store count to 1,981, up from 1,978 at the beginning of the quarter[75] - Target Circle Card penetration decreased to 17.4% from 18.0% year-over-year, indicating a slight decline in customer engagement with the loyalty program[70] - The company is actively monitoring the impact of tariffs and adjusting sourcing and pricing strategies to mitigate potential negative effects on sales[60] Debt Management - The company issued $1.0 billion of debt in March 2025 and repaid $1.5 billion in April 2025[98]

Financial Performance - Net sales for Q1 fiscal 2025 increased by $75 million, or 2%, compared to Q1 fiscal 2024, primarily driven by a 6% increase in online sales [81]. - Gross profit for Q1 fiscal 2025 was $1.45 billion, with a gross margin of 41.8%, up from $1.40 billion and 41.2% in Q1 fiscal 2024 [81]. - Operating income for Q1 fiscal 2025 rose to $260 million, compared to $205 million in Q1 fiscal 2024 [81]. - Net income for Q1 fiscal 2025 was $193 million, an increase from $158 million in Q1 fiscal 2024, with diluted earnings per share at $0.51 compared to $0.41 [81]. Inventory and Expenses - Merchandise inventory as of Q1 fiscal 2025 increased by 7% compared to Q1 fiscal 2024 [81]. - Operating expenses for Q1 fiscal 2025 were $1.19 billion, representing 34.3% of net sales, down from 35.2% in Q1 fiscal 2024 [94]. Tax and Cash Flow - The effective income tax rate for Q1 fiscal 2025 was 26.6%, up from 24.0% in Q1 fiscal 2024 [98]. - Net cash used for operating activities was $140 million in Q1 fiscal 2025, compared to $30 million of net cash provided in Q1 fiscal 2024 [102]. - Free cash flow for the 13 weeks ended May 3, 2025, was $(223) million, compared to $(63) million for the same period in 2024 [107]. Financing Activities - Net cash used for financing activities increased by $76 million in Q1 fiscal 2025, primarily due to $70 million in common stock repurchases [103]. - The company paid a dividend of $0.165 per share in the first quarter of fiscal 2025 and authorized the same amount for the second quarter [108]. Capital Expenditures - Purchases of property and equipment amounted to $(83) million for the 13 weeks ended May 3, 2025, compared to $(93) million in 2024 [107]. Other Considerations - There have been no material changes to contractual obligations and commercial commitments since the last annual report [110]. - No significant changes to critical accounting policies and estimates have occurred since the last annual report [111]. - The market risk profile as of February 1, 2025, has not significantly changed [112].

Financial Performance - Net sales for Q1 fiscal 2025 increased by $75 million, or 2%, compared to Q1 fiscal 2024, primarily driven by a 6% increase in online sales [81]. - Gross profit for Q1 fiscal 2025 was $1.45 billion, with a gross margin of 41.8%, up from $1.40 billion and 41.2% in Q1 fiscal 2024 [81]. - Operating income for Q1 fiscal 2025 rose to $260 million, compared to $205 million in Q1 fiscal 2024 [81]. - Net income for Q1 fiscal 2025 was $193 million, an increase from $158 million in Q1 fiscal 2024, with diluted earnings per share at $0.51 compared to $0.41 [81]. Inventory and Expenses - Merchandise inventory as of Q1 fiscal 2025 increased by 7% compared to Q1 fiscal 2024 [81]. - Operating expenses for Q1 fiscal 2025 were $1.19 billion, representing 34.3% of net sales, down from 35.2% in Q1 fiscal 2024 [94]. Tax and Cash Flow - The effective income tax rate for Q1 fiscal 2025 was 26.6%, up from 24.0% in Q1 fiscal 2024 [98]. - Net cash used for operating activities was $140 million in Q1 fiscal 2025, compared to $30 million provided in Q1 fiscal 2024 [102]. - Free cash flow for the 13 weeks ended May 3, 2025, was $(223) million, compared to $(63) million for the same period in 2024 [107]. - Net cash used for operating activities was $(140) million for the 13 weeks ended May 3, 2025, compared to $30 million for the same period in 2024 [107]. - Purchases of property and equipment amounted to $(83) million for the 13 weeks ended May 3, 2025, compared to $(93) million for the same period in 2024 [107]. Company Operations - The company operated a total of 2,496 company-operated stores as of May 3, 2025, a decrease of 10 stores from the previous year [89]. - The company paid a dividend of $0.165 per share in the first quarter of fiscal 2025 and authorized the same amount for the second quarter [108]. Risk and Compliance - There have been no material changes to contractual obligations and commercial commitments since the last annual report [110]. - No significant changes to critical accounting policies and estimates have occurred since the last annual report [111]. - The market risk profile as of February 1, 2025, has not significantly changed [112].