PagerDuty (NYSE:PD) Surprises With Q2 Sales, Stock Soars

Kayode Omotosho /
2021/09/02 4:14 pm EDT

IT incident response platform PagerDuty (NYSE:PD) reported Q2 FY2022 results topping analyst expectations, with revenue up 33.1% year on year to $67.5 million. PagerDuty made a GAAP loss of $29.6 million, down on its loss of $14.6 million, in the same quarter last year.

Is now the time to buy PagerDuty? Access our full analysis of the earnings results here, it's free.

PagerDuty (PD) Q2 FY2022 Highlights:

  • Revenue: $67.5 million vs analyst estimates of $65.5 million (3.08% beat)
  • EPS (non-GAAP): -$0.13 vs analyst estimates of -$0.15
  • Revenue guidance for Q3 2022 is $70 million at the midpoint, above analyst estimates of $68.3 million
  • The company lifted revenue guidance for the full year, from $269.5 million to $274.5 million at the midpoint, a 1.85% increase
  • Free cash flow was negative $12.8 million, compared to negative free cash flow of -$350 thousand in previous quarter
  • Customers: 18,000, up from 16,800 in previous quarter
  • Gross Margin (GAAP): 82.2%, down from 83.6% previous quarter

"Q2 was an inflection point for PagerDuty. We delivered strong financial results and demonstrated increasing market share leadership. The durability of our growth, the long term potential for our platform and the legacy we are building are clear. Our solid topline beat was driven by accelerating demand for both our new Automation offering and our comprehensive Digital Operations plan, especially in the enterprise and mid-market segments,” said Jennifer Tejada, CEO at PagerDuty.

Founded in 2009, 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 strong over the last year, growing from quarterly revenue of $50.7 million, to $67.5 million.

PagerDuty Total Revenue

And unsurprisingly, this was another great quarter for PagerDuty with revenue up an absolutely stunning 33.1% year on year. Quarter on quarter the revenue increased by $3.94 million in Q2, which was in line with Q1 2022. This steady quarter-on-quarter growth shows the company is able to maintain a strong growth trajectory.

Analysts covering the company are expecting the revenues to grow 23.2% over the next twelve months, although we would expect them to review their estimates once they get to read these results.

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 18,000 customers at the end of the quarter, an increase of 1,200 on last quarter. That is a bit slower customer growth than last quarter but quite a bit still above what we have typically seen over the last year, suggesting sales momentum is coming off slightly after a stronger quarter.

PagerDuty Customers

Key Takeaways from PagerDuty's Q2 Results

With a market capitalization of $3.66 billion PagerDuty is among smaller companies, but its more than $354.5 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.

PagerDuty' revenue guidance for the next quarter looks quite a bit better than what the analysts were expecting. And we were also excited to see the really strong revenue growth. On the other hand, it was unfortunate to see the slowdown in customer growth and gross margin deteriorated a little. Zooming out, we think this was still a decent, albeit mixed, quarter, showing the company is staying on target. The company is up 6.01% on the results and currently trades at $46.9 per share.

Should you invest in PagerDuty 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.