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1. Company Snapshot

1.a. Company Description

PagerDuty, Inc.operates a digital operations management platform in the United States, Japan, and internationally.Its digital operations management platform collects data digital signals from virtually any software-enabled system or device, and leverage powerful machine learning to correlate, process, and predict opportunities and issues.


It serves various industries, including software and technology, telecommunications, retail, travel and hospitality, media and entertainment, and financial services.PagerDuty, Inc.was founded in 2009 and is headquartered in San Francisco, California.

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1.b. Last Insights on PD

PagerDuty's recent performance was negatively impacted by mixed Q3 financial results, with the company reporting a revenue of $125 million, but issuing fourth-quarter sales guidance below estimates. The automated response software company's Q3 earnings surpassed estimates at $0.33 per share, but sales missed expectations. Analysts cut their forecasts following the Q3 results, citing a "mixed" report. Additionally, a recent leadership change in sales, with Todd McNabb stepping in as CRO, may be a response to broad-based seat-based headwinds, particularly in the SMB and enterprise segments.

1.c. Company Highlights

2. PagerDuty's Q3 Earnings: A Mixed Bag

PagerDuty, Inc. delivered revenue of $125 million in the third quarter, up 5% year over year. Non-GAAP operating margin exceeded guidance by 750 basis points, achieving GAAP profitability for the second consecutive quarter. The company's EPS came out at $1.69, significantly beating estimates of $0.24. Annual recurring revenue (ARR) of $497 million represents 3% year-on-year growth. The company's focus on expanding operating and free cash flow margins, extending its product advantage in AI operations, and scaling its go-to-market transformation is evident in its results.

Publication Date: Nov -26

📋 Highlights
  • Revenue Growth and Profitability:: PagerDuty reported $125M revenue (5% YoY growth) and achieved GAAP profitability for the second consecutive quarter, with non-GAAP operating margin exceeding guidance by 750 basis points.
  • Annual Recurring Revenue (ARR):: ARR reached $497M, reflecting 3% YoY growth, despite challenges from seat license compression in large enterprises.
  • Customer Acquisition and Retention:: New customer growth was double-digit YoY, but seat compression and larger customer downgrades led to dollar-based net retention deceleration, though logo retention improved.
  • AiOps and Pricing Shift:: AI operations revenue grew 50% YoY, and the company is transitioning to usage-based pricing, with 29% of total revenue now from international markets (7% YoY growth).
  • Guidance and Strategic Focus:: Full-year 2026 revenue guidance narrowed to $494–$497M (5% growth), with a 30% long-term operating margin target, emphasizing margin optimization and AI-driven product adoption.

Revenue and Margin Performance

The company's revenue growth was modest, with a 5% year-on-year increase. However, its non-GAAP operating margin expansion was significant, exceeding guidance by 750 basis points. This achievement is a testament to the company's efforts in optimizing its spend and delivering good results. As Howard Wilson mentioned, "We're proud of our progress, with six consecutive years of improving operating margin."

Annual Recurring Revenue and Customer Growth

ARR grew 3% year over year to $497 million, indicating a slowdown in growth. However, the company is prioritizing customer retention and growth, stabilizing customer low retention through targeted efforts. PagerDuty has seen double-digit year-over-year growth in new customer acquisition and total paid and free customers, which is a positive sign.

Valuation Metrics

PagerDuty's valuation metrics provide insight into what's priced in. The company's P/E Ratio is 9.2, P/S Ratio is 2.84, and EV/EBITDA is 600.79. The high EV/EBITDA ratio suggests that the company's profitability is not fully reflected in its valuation. Analysts estimate next year's revenue growth at 6.4%, which may justify the current valuation to some extent.

Operational Highlights and Future Outlook

The company is making significant progress in its go-to-market transformation, with a refined adoption and value realization program through its customer success team. PagerDuty is also extending its product advantage in end-to-end incident management and AI and agentic operations. The company's guidance for Q4 expects revenue in the range of $122 to $124 million, representing a growth of zero to 2%. For the full fiscal year 2026, the company now expects revenue in the range of $494 to $497 million, representing a growth rate of 5%.

3. NewsRoom

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Securities Fraud Investigation Into PagerDuty, Inc. (PD) Announced – Shareholders Who Lost Money Urged To Contact Glancy Prongay & Murray LLP, a Leading Securities Fraud Law Firm

Dec -04

Source: businesswire.com

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PagerDuty, Inc. (PD) Shareholders Who Lost Money – Contact Law Offices of Howard G. Smith About Securities Fraud Investigation

Dec -04

Source: businesswire.com

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Securities Fraud Investigation Into PagerDuty, Inc. (PD) Announced – Shareholders Who Lost Money Urged to Contact The Law Offices of Frank R. Cruz

Dec -04

Source: businesswire.com

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Down 26.6% in 4 Weeks, Here's Why PagerDuty (PD) Looks Ripe for a Turnaround

Dec -02

Source: zacks.com

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Here Are Tuesday’s Top Wall Street Analyst Research Calls: Albemarle, Circle Internet, Cloudflare, Danaher, Inspire Medical, Six Flags, Workday and More

Dec -02

Source: 247wallst.com

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PagerDuty Becomes Newest AWS Software Partner to Earn Resilience Competency

Dec -01

Source: businesswire.com

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Brokerages Set Precision Drilling Co. (TSE:PD) PT at C$102.00

Nov -29

Source: defenseworld.net

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PagerDuty: Growth Is Gone (Rating Downgrade)

Nov -28

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (14.07%)

6. Segments

Digital Operations Management

Expected Growth: 14.07%

PagerDuty's Digital Operations Management growth is driven by increasing adoption of digital transformation, rising demand for real-time incident response, and growing need for automation and AI-powered IT operations. Additionally, the shift to remote work and cloud-based infrastructure has accelerated the need for proactive issue detection and resolution, further fueling growth.

7. Detailed Products

Incident Response

PagerDuty's incident response product helps teams respond to incidents quickly and efficiently, reducing downtime and improving overall system reliability.

Digital Operations

PagerDuty's digital operations product provides real-time visibility into system performance, enabling teams to detect and resolve issues before they impact customers.

Event Management

PagerDuty's event management product helps teams automate and orchestrate incident response, reducing noise and improving mean time to detect (MTTD) and mean time to resolve (MTTR).

AIOps

PagerDuty's AIOps product uses machine learning and automation to help teams detect and resolve complex issues, reducing noise and improving incident response.

Customer Service Operations

PagerDuty's customer service operations product helps teams provide exceptional customer experiences, reducing resolution time and improving customer satisfaction.

8. PagerDuty, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

PagerDuty's services are highly specialized and integrated with other IT tools, making it difficult for customers to find substitutes. However, the threat of substitutes is still present due to the presence of other incident management and response tools.

Bargaining Power Of Customers

PagerDuty's customers are largely enterprise-level companies that require customized solutions, giving them limited bargaining power. Additionally, the company's subscription-based model and high switching costs further reduce customer bargaining power.

Bargaining Power Of Suppliers

PagerDuty's suppliers are primarily cloud infrastructure providers, and the company has a diversified supplier base, reducing dependence on any single supplier. This limits the bargaining power of suppliers.

Threat Of New Entrants

The incident management and response market is highly competitive, and new entrants can easily replicate PagerDuty's services. However, the company's strong brand recognition, established customer base, and high switching costs for customers mitigate this threat to some extent.

Intensity Of Rivalry

The incident management and response market is highly competitive, with several established players and new entrants vying for market share. PagerDuty faces intense competition from companies like Splunk, New Relic, and Datadog, among others.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 72.58%
Debt Cost 3.95%
Equity Weight 27.42%
Equity Cost 8.59%
WACC 5.22%
Leverage 264.69%

11. Quality Control: PagerDuty, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Olo

A-Score: 5.4/10

Value: 3.5

Growth: 8.3

Quality: 5.2

Yield: 0.0

Momentum: 9.5

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
WM Technology

A-Score: 4.5/10

Value: 7.5

Growth: 3.0

Quality: 7.0

Yield: 0.0

Momentum: 8.0

Volatility: 1.3

1-Year Total Return ->

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Stock-Card
Matterport

A-Score: 4.3/10

Value: 6.4

Growth: 5.0

Quality: 4.0

Yield: 0.0

Momentum: 7.0

Volatility: 3.3

1-Year Total Return ->

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Stock-Card
PagerDuty

A-Score: 3.8/10

Value: 3.9

Growth: 7.8

Quality: 3.5

Yield: 0.0

Momentum: 3.0

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
Bumble

A-Score: 3.7/10

Value: 9.2

Growth: 4.0

Quality: 3.4

Yield: 0.0

Momentum: 3.5

Volatility: 2.0

1-Year Total Return ->

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Stock-Card
Jamf

A-Score: 3.3/10

Value: 4.2

Growth: 5.8

Quality: 4.8

Yield: 0.0

Momentum: 0.5

Volatility: 4.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.28$

Current Price

12.28$

Potential

-0.00%

Expected Cash-Flows