PagerDuty's (NYSE:PD) Q1 Earnings Results: Revenue In Line With Expectations, Customer Growth Accelerates

Kayode Omotosho /
2024/05/30 4:29 pm EDT

IT incident response platform PagerDuty (NYSE:PD) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 7.7% year on year to $111.2 million. The company expects next quarter's revenue to be around $116.5 million, in line with analysts' estimates. It made a non-GAAP profit of $0.17 per share, down from its profit of $0.19 per share in the same quarter last year.

Is now the time to buy PagerDuty? Find out by accessing our full research report, it's free.

PagerDuty (PD) Q1 CY2024 Highlights:

  • Revenue: $111.2 million vs analyst estimates of $111.5 million (small miss)
  • EPS (non-GAAP): $0.17 vs analyst estimates of $0.13 (36% beat)
  • Revenue Guidance for Q2 CY2024 is $116.5 million at the midpoint, roughly in line with what analysts were expecting
  • The company reconfirmed its revenue guidance for the full year of $474 million at the midpoint
  • Gross Margin (GAAP): 82.6%, in line with the same quarter last year
  • Free Cash Flow of $27.1 million, up 38.2% from the previous quarter
  • Customers: 15,120, up from 15,039 in the previous quarter
  • Billings: $106.7 million at quarter end, up 11.2% year on year
  • Market Capitalization: $1.86 billion

“PagerDuty delivered a solid first quarter with annual recurring revenue growth stabilizing at 10% for the second consecutive quarter, and non-GAAP operating margin four percentage points above the range,” said Jennifer Tejada, Chairperson and CEO.

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.

Cloud Monitoring

Software is eating the world, increasing organizations’ reliance on digital-only solutions. As more workloads and applications move to the cloud, the reliability of the underlying cloud infrastructure becomes ever more critical and ever more complex. To solve this challenge, companies and their engineering teams have turned to a range of cloud monitoring tools that provide them with the visibility to troubleshoot issues in real-time.

Sales Growth

As you can see below, PagerDuty's revenue growth has been strong over the last three years, growing from $63.59 million in Q1 2022 to $111.2 million this quarter.

PagerDuty Total Revenue

PagerDuty's quarterly revenue was only up 7.7% year on year, which might disappoint some shareholders. Additionally, its growth did slow down compared to last quarter as the company's revenue increased by just $55,000 in Q1 compared to $2.40 million in Q4 CY2023. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.

Next quarter's guidance suggests that PagerDuty is expecting revenue to grow 8.3% year on year to $116.5 million, slowing down from the 19.2% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 11.5% over the next 12 months before the earnings results announcement.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefitting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.

Customer Growth

PagerDuty reported 15,120 customers at the end of the quarter, an increase of 81 from the previous quarter. That's a little better customer growth than last quarter and quite a bit above the typical growth we've seen in past quarters, demonstrating that the business has strong sales momentum. We've no doubt shareholders will take this as an indication that PagerDuty's go-to-market strategy is working very well.

PagerDuty Customers

Key Takeaways from PagerDuty's Q1 Results

We were impressed by PagerDuty's strong growth in customers this quarter. We were also glad its billings and EPS outperformed Wall Street's estimates. On the other hand, its full-year revenue guidance slightly missed Wall Street's estimates. Overall, this quarter's results still seemed fairly positive and shareholders should feel optimistic. The stock is up 3.7% after reporting and currently trades at $18.61 per share.

So should you invest in PagerDuty right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.