PagerDuty's (NYSE:PD) Q4 Earnings Results: Revenue In Line With Expectations But Stock Drops

Max Juang /
2024/03/14 4:20 pm EDT

IT incident response platform PagerDuty (NYSE:PD) reported results in line with analysts' expectations in Q4 FY2024, with revenue up 10.1% year on year to $111.1 million. On the other hand, next quarter's revenue guidance of $111.5 million was less impressive, coming in 1.7% below analysts' estimates. It made a non-GAAP profit of $0.17 per share, improving from its loss of $0.25 per share in the same quarter last year.

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PagerDuty (PD) Q4 FY2024 Highlights:

  • Revenue: $111.1 million vs analyst estimates of $110.4 million (small beat)
  • EPS (non-GAAP): $0.17 vs analyst estimates of $0.15 (12.6% beat)
  • Revenue Guidance for Q1 2025 is $111.5 million at the midpoint, below analyst estimates of $113.4 million
  • Management's revenue guidance for the upcoming financial year 2025 is $474 million at the midpoint, missing analyst estimates by 1.4% and implying 10.1% growth (vs 16.4% in FY2024)
  • Gross Margin (GAAP): 81.7%, in line with the same quarter last year
  • Free Cash Flow of $19.61 million, up 28.8% from the previous quarter
  • Customers: 15,039, down from 15,049 in the previous quarter
  • Market Capitalization: $2.15 billion

“PagerDuty delivered year-over-year revenue growth of 16% and operating margin expansion of more than 1,200 basis points to complete a second consecutive year of growing non-GAAP profitability,” said Jennifer Tejada, Chairperson and CEO, 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.

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Sales Growth

As you can see below, PagerDuty's revenue growth has been strong over the last three years, growing from $59.28 million in Q4 2021 to $111.1 million this quarter.

PagerDuty Total Revenue

This quarter, PagerDuty's quarterly revenue was once again up 10.1% year on year. We can see that PagerDuty's revenue increased by $2.40 million quarter on quarter, which is a solid improvement from the $1.10 million increase in Q3 2024. Shareholders should applaud the acceleration of growth.

Next quarter's guidance suggests that PagerDuty is expecting revenue to grow 8% year on year to $111.5 million, slowing down from the 20.9% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $474 million at the midpoint, growing 10.1% year on year compared to the 16.2% increase in FY2024.

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Customer Growth

PagerDuty reported 15,039 customers at the end of the quarter, a decrease of 10 from the previous quarter. That's 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 Q4 Results

We were impressed by PagerDuty's strong growth in customers this quarter. On the other hand, its full-year revenue guidance was below expectations and and suggests a slowdown in demand. Overall, this was a mixed quarter for PagerDuty, with the guidance weighing on shares. The company is down 7.8% on the results and currently trades at $21.15 per share.

PagerDuty may have had a tough quarter, but does that actually create an opportunity to invest 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.