PagerDuty (NYSE:PD) Q3 Sales Beat Estimates, Stock Jumps 13.2%

Adam Hejl /
2021/12/07 4:25 pm EST

IT incident response platform PagerDuty (NYSE:PD) reported strong growth in the Q3 FY2022 earnings announcement, with revenue up 33.4% year on year to $71.7 million. Guidance for next quarter's revenue was $76 million at the midpoint, 3.14% above the average of analyst estimates. PagerDuty made a GAAP loss of $26.3 million, down on its loss of $20.6 million, in the same quarter last year.

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PagerDuty (PD) Q3 FY2022 Highlights:

  • Revenue: $71.7 million vs analyst estimates of $70.1 million (2.29% beat)
  • EPS (non-GAAP): -$0.07 vs analyst estimates of -$0.09
  • Revenue guidance for Q4 2022 is $76 million at the midpoint, above analyst estimates of $73.6 million
  • Free cash flow of $1.78 million, up from negative free cash flow of $12.8 million in previous quarter
  • Customers: 14,486, up from 14,100 in previous quarter
  • Gross Margin (GAAP): 83.2%, down from 85.7% same quarter last year

"Q3 was an outstanding quarter for PagerDuty as we delivered record revenue of $72 million and grew 33% year over year. Our product innovation continues to accelerate across use cases and departments as we empower enterprises to mature their digital operations and deliver superior customer experiences," said Jennifer Tejada, Chairperson and CEO at PagerDuty.

Started by three former Amazon engineers, PagerDuty (NYSE:PD) is a software as a service platform that helps companies respond to IT incidents fast and make sure that any downtime is minimized.

Software is eating the world, and as the number of enterprise apps grows, so does the need to effectively monitor them and keep them online.

Sales Growth

As you can see below, PagerDuty's revenue growth has been very strong over the last year, growing from quarterly revenue of $53.7 million, to $71.7 million.

PagerDuty Total Revenue

And unsurprisingly, this was another great quarter for PagerDuty with revenue up 33.4% year on year. On top of that, revenue increased $4.22 million quarter on quarter, a solid improvement on the $3.94 million increase in Q2 2022, and even a sign of slight acceleration of growth.

Analysts covering the company are expecting the revenues to grow 22.8% over the next twelve months, although estimates are likely to change post earnings.

There are others doing even better than PagerDuty. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 400% since the IPO in December. You can find it on our platform for free.

Customer Growth

You can see below that PagerDuty reported 14,486 customers at the end of the quarter, an increase of 386 on last quarter. That is a little better customer growth than last quarter and quite a bit above the typical customer growth we have seen lately, demonstrating that the business itself has good sales momentum. We've no doubt shareholders will take this as an indication that the company's go-to-market strategy is working very well.

PagerDuty Customers

Key Takeaways from PagerDuty's Q3 Results

With a market capitalization of $2.68 billion PagerDuty is among smaller companies, but its more than $359.7 million in cash and the fact it is operating close to free cash flow break-even put it in a robust financial position to invest in growth.

We were very impressed by PagerDuty’s very strong acceleration in customer growth this quarter. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. Overall, we think this was a strong quarter, that should leave shareholders feeling very positive. The company is up 13.2% on the results and currently trades at $38 per share.

PagerDuty may have had a good quarter, so should you invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.