Breaking Down PagerDuty, Inc. (PD) Financial Health: Key Insights for Investors

Are you keeping a close watch on PagerDuty Inc. (PD) and trying to gauge its financial stability? As of fiscal year 2024, PagerDuty reported a revenue of $467.50 million, marking an 8.54% increase from the previous year, and analysts project a potential upside of 18.11% from the current price with an average twelve-month price target of $21.91. But with a GAAP operating loss of $96.2 million and a consensus rating of 'Hold,' is PD truly a promising investment? Dive in as we dissect PagerDuty's key financial indicators, strategic moves, and expert analyses to help you make an informed decision.

PagerDuty, Inc. (PD) Revenue Analysis

Understanding PagerDuty, Inc.'s (PD) revenue streams is crucial for investors to assess the company's financial health and growth potential. Here's a breakdown of key aspects of their revenue:

Primary Revenue Sources:

• Cloud-hosted Software Subscription Fees: PagerDuty primarily generates revenue from cloud-hosted software subscriptions.
• Term-license Software Subscription Fees: Additional revenue comes from term-license software subscriptions.

PagerDuty employs a 'land-and-expand' business model, focusing on enterprise customers who contribute the majority of its revenue.

Year-over-Year Revenue Growth Rate:

• Fiscal Year 2024 (ended January 31, 2024): Revenue was $430.7 million, a 16.2% increase year-over-year.
• Fiscal Year 2025 (ended January 31, 2025): Revenue reached $467.5 million, reflecting a 9% increase from the previous year.
• Third Quarter Fiscal 2025: Revenue was $118.9 million, a 9.4% increase year over year.

Historical Revenue Growth:

A look at PagerDuty's revenue growth over the years:

Contribution of Different Business Segments to Overall Revenue:

• Incident Management: Contributed 70% of the total annual recurring revenue (ARR) in Q4 Fiscal Year 2025, compared to 73% in Fiscal Year 2024.
• Customers with ARR over $100,000: Accounted for 71% of the total ARR, up from 70% in Fiscal Year 2024.
• Multi-Product Customers: Customers using two or more paid products represented 65% of total ARR, an increase from 62% in the previous year.

Geographical Performance:

• International Operations: Generated 28% of PagerDuty's revenue for the fiscal year ended January 31, 2025. The company is focusing on expanding its presence in EMEA, Asia Pacific, and Japan.

Analysis of Significant Changes in Revenue Streams:

• Customer Growth: Total customers exceeded 30,000, up 11% year-over-year. Total paid customers were 15,050 as of October 31, 2024.
• Customers with High ARR: Customers with annual recurring revenue (ARR) over $100,000 grew 6% to 825 as of October 31, 2024.
• Dollar-Based Net Retention Rate: Was 107% as of October 31, 2024.

To gain more insights, check out: Breaking Down PagerDuty, Inc. (PD) Financial Health: Key Insights for Investors

PagerDuty, Inc. (PD) Profitability Metrics

Assessing the financial health of PagerDuty, Inc. (PD) requires a close examination of its profitability metrics. These metrics provide insights into the company's ability to generate earnings relative to its revenue, assets, and equity. Let's delve into the key profitability indicators for PagerDuty.

One of the primary measures of profitability is the gross profit margin, which reflects the percentage of revenue remaining after deducting the cost of goods sold (COGS). For the fiscal year 2024, PagerDuty's gross profit was $326.4 million. The gross profit margin was approximately 80.2%. This high gross profit margin indicates that PagerDuty is efficient in managing its production costs and generating substantial value from its services.

The operating profit margin, also known as the earnings before interest and taxes (EBIT) margin, assesses a company's profitability from its core operations, excluding the effects of financing and taxes. In FY24, PagerDuty's operating loss was $29.9 million, equating to an operating margin of approximately -7.3%. This negative operating margin shows that PagerDuty's operating expenses exceeded its gross profit, resulting in an operating loss.

Net profit margin is a critical metric that reveals the percentage of revenue that translates into net income after all expenses, including interest, taxes, and other deductions, have been paid. PagerDuty's net loss for FY24 was $37.9 million, leading to a net profit margin of approximately -9.3%. The negative net profit margin indicates that PagerDuty incurred a loss after accounting for all expenses.

Analyzing the trends in profitability over time provides valuable context for understanding PagerDuty's financial performance. While gross profit margins have remained relatively stable, operating and net profit margins have fluctuated due to variations in operating expenses and other factors. Monitoring these trends helps investors assess the sustainability of PagerDuty's profitability and identify potential areas for improvement.

When evaluating PagerDuty's profitability, it's essential to compare its profitability ratios with industry averages. This comparison provides insights into how PagerDuty performs relative to its peers and competitors. While specific industry averages may vary depending on the sector and market conditions, benchmarking PagerDuty's profitability against these averages helps investors gauge its competitive positioning and identify areas where it may excel or lag behind.

Operational efficiency plays a significant role in driving profitability. Effective cost management practices, such as streamlining operations, optimizing resource allocation, and controlling expenses, can enhance a company's ability to generate profits. Additionally, monitoring gross margin trends helps identify potential areas for improvement in production efficiency and pricing strategies. For example, PagerDuty's cost of revenue was $80.4 million in FY24.

Here is a summary of PagerDuty's profitability metrics based on the 2024 fiscal year:

Understanding these key profitability metrics and their trends is crucial for investors seeking to assess PagerDuty's financial health and make informed investment decisions. Keep in mind PagerDuty's Mission Statement, Vision, & Core Values of PagerDuty, Inc. (PD).

PagerDuty, Inc. (PD) Debt vs. Equity Structure

Understanding how PagerDuty, Inc. (PD) manages its debt relative to its equity is crucial for investors. This balance sheet overview provides insight into the company's financial strategy, risk profile, and long-term sustainability. Here's a breakdown of PagerDuty's debt levels, debt-to-equity ratio, and financing activities.

As of January 31, 2024, PagerDuty reported the following:

• Total cash, cash equivalents, and marketable securities: $467.2 million
• Total current liabilities: $144.3 million
• Total assets: $974.9 million
• Total liabilities: $441.4 million

PagerDuty, Inc. (PD) primarily uses equity financing but strategically incorporates debt to boost growth. As of January 31, 2024, PagerDuty had a mix of short-term and long-term liabilities, reflecting its approach to funding operations and expansion.

• Short-term debt (included in current liabilities): $144.3 million
• Long-term debt: $224.3 million

The company’s debt-to-equity ratio can be calculated using the available data. As of January 31, 2024, total equity was $533.5 million (Total Assets of $974.9 million less Total Liabilities of $441.4 million). The debt-to-equity ratio is calculated as Total Liabilities divided by Total Equity:

$441.4 million / $533.5 million = 0.83

A debt-to-equity ratio of 0.83 indicates that for every dollar of equity, PagerDuty has $0.83 in debt. This ratio is a key indicator for investors, reflecting the balance between debt and equity used to finance the company's assets. The company’s financial statements provide additional details on their debt structure and repayment terms.

PagerDuty's financing activities, including any debt issuances or refinancing, play a crucial role in its capital structure. While specific details on recent credit ratings or refinancing activities would require up-to-date information, monitoring these aspects helps assess the company's financial health and its ability to manage its debt obligations.

For more insights into PagerDuty, Inc. (PD) and its investors, check out: Exploring PagerDuty, Inc. (PD) Investor Profile: Who’s Buying and Why?

PagerDuty, Inc. (PD) Liquidity and Solvency

Understanding PagerDuty, Inc.'s financial health requires a close look at its liquidity and solvency, which reveal the company's ability to meet its short-term and long-term obligations. Let’s explore these critical aspects based on the latest financial data.

Assessing PagerDuty, Inc.'s Liquidity:

Liquidity ratios provide insights into a company's ability to cover its immediate liabilities. Here's how PagerDuty, Inc. stands:

• Current Ratio: The current ratio, calculated by dividing current assets by current liabilities, indicates whether a company has enough short-term assets to cover its short-term debt. For the fiscal year 2024, PagerDuty's current ratio was approximately 2.3. This suggests a healthy liquidity position.
• Quick Ratio: The quick ratio, also known as the acid-test ratio, is a more conservative measure of liquidity because it excludes inventories from current assets. As PagerDuty is a software company and doesn't have significant inventory, the quick ratio is very close to the current ratio.

Analysis of Working Capital Trends:

Working capital, the difference between a company's current assets and current liabilities, is a measure of its short-term financial health. Monitoring the trends in working capital can reveal whether a company is efficiently managing its short-term resources.

For PagerDuty, Inc., the working capital has been increasing, reflecting better management of its current assets and liabilities. As of the fiscal year 2024, PagerDuty's working capital stood at approximately $230 million. This increase indicates that the company has more liquid assets available to cover its short-term obligations and invest in future growth.

Cash Flow Statements Overview:

Cash flow statements provide a detailed look at how a company generates and uses cash. They are divided into three main categories:

• Operating Cash Flow: This indicates the cash a company generates from its core business activities. PagerDuty, Inc. has seen improvements in its operating cash flow, indicating enhanced profitability and efficient management of working capital.
• Investing Cash Flow: This section reflects cash used for investments, such as purchasing property, plant, and equipment (PP&E).
• Financing Cash Flow: This includes activities related to debt, equity, and dividends.

In the fiscal year 2024, PagerDuty reported positive operating cash flow, which is a sign of financial stability. The company’s ability to generate cash from its operations ensures it can fund its growth initiatives and meet its financial obligations without relying heavily on external financing.

Potential Liquidity Concerns or Strengths:

Based on the analysis, PagerDuty, Inc. exhibits several liquidity strengths:

• Strong Current and Quick Ratios: These indicate the company's ability to meet its short-term obligations.
• Increasing Working Capital: This reflects efficient management of short-term assets and liabilities.
• Positive Operating Cash Flow: This demonstrates the company's ability to generate cash from its core business activities.

Overall, PagerDuty, Inc. demonstrates a solid liquidity position, with no immediate concerns. The company's prudent financial management and ability to generate cash from operations support its growth strategy and ensure it can meet its financial obligations effectively.

For more insights into PagerDuty, Inc.'s financial health, check out: Breaking Down PagerDuty, Inc. (PD) Financial Health: Key Insights for Investors

PagerDuty, Inc. (PD) Valuation Analysis

Determining whether PagerDuty, Inc. (PD) is overvalued or undervalued requires a look at several key financial metrics and market indicators.

Here’s an overview:

• Price-to-earnings (P/E) Ratio: As of April 2025, PagerDuty's P/E ratio is -15.2. A negative P/E ratio indicates that the company is currently generating losses, which makes it difficult to interpret in the traditional sense. Generally, companies with negative P/E ratios are considered 'growth stocks,' where investors anticipate future profitability.
• Price-to-book (P/B) Ratio: The price-to-book ratio for PagerDuty is around 9.44 to 10.60 as of April 2025. A higher P/B ratio may suggest that the stock is overvalued relative to its book value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio is -30.24 to -112.04 as of March 2025. A negative EV/EBITDA ratio, like the P/E ratio, suggests the company has negative earnings (EBITDA), making the ratio difficult to interpret.

Assessing these metrics relative to industry peers and historical data provides a more nuanced understanding.

Here's a quick comparison of PagerDuty’s valuation metrics against its peers:

Based on the price-to-sales ratio, PagerDuty might be considered good value compared to its peers.

Examining the stock price trends provides context to valuation ratios:

• Stock Price Range: Over the past 52 weeks, the stock has traded between $14.40 and $23.12.
• Recent Performance: As of April 2025, the stock was trading around $14.74. The stock has experienced volatility, recently hitting its 52-week low.

Given that PagerDuty does not offer dividends, dividend yield and payout ratios are not applicable.

Analysts' consensus can offer additional insights:

• Analyst Ratings: The consensus rating for PagerDuty is a 'Moderate Buy'.
• Price Targets: The average 12-month price target from analysts is $20.29 to $20.67, with a high forecast of $25.00 to $26.00 and a low forecast of $17.00. This suggests analysts anticipate an upside potential of approximately 37.65% from the current price.

In summary, while some valuation ratios like P/E and EV/EBITDA are difficult to interpret due to current losses, the price-to-sales ratio suggests that PagerDuty may offer good value compared to its peers. Analyst ratings indicate a moderate buy consensus with a notable upside potential in the stock price. However, investors should consider the company's lack of current profitability and recent stock volatility. You might also be interested in: Mission Statement, Vision, & Core Values of PagerDuty, Inc. (PD).

PagerDuty, Inc. (PD) Risk Factors

Several internal and external factors can impact PagerDuty, Inc. (PD)'s financial health. These risks range from industry competition and regulatory changes to market conditions and the company's specific operational and strategic challenges.

Industry Competition

The market for digital operations management is highly competitive. PagerDuty faces competition from both established companies and new entrants, particularly those leveraging emerging AI technologies. This intense competition requires continuous adaptation and innovation to maintain a competitive edge.

Mitigation Strategies:

• Investing in product development
• Expanding sales and marketing efforts
• Enhancing customer support to improve retention and growth

Technological Adaptation

Rapid technological changes, evolving industry standards, and changing customer needs require PagerDuty to continuously adapt its platform. Failure to do so could render its products less competitive.

Cybersecurity Threats

The company is exposed to cybersecurity risks, including data breaches and system failures, which could result in significant costs, reputational harm, and loss of customers.

Regulatory Risks

Changes in regulations, particularly those related to data privacy and AI, could increase operational costs and impact the company's ability to offer certain products.

Economic Conditions

Unfavorable global economic conditions, including inflation and geopolitical conflicts, could limit the company's growth and negatively affect its results of operations.

International Operations

The company's international expansion exposes it to risks such as currency fluctuations, differing regulatory environments, and potential political instability.

Intellectual Property

Protecting proprietary technology is critical, yet challenging, due to the potential for unauthorized use and the high cost of litigation.

Market Risks

The company is exposed to market risks such as foreign currency exchange rate fluctuations, which could adversely affect its financial results. Management is considering hedging strategies to mitigate these risks.

Operational Risks

Operating Losses and Profitability: The company has a history of operating losses and may not achieve or sustain profitability in the future. This is compounded by expected increases in costs and expenses, particularly in platform development and international expansion.

Revenue Concentration: A significant majority of the company's revenue is derived from a single product, which poses a risk if demand for this product declines or if competitors introduce superior alternatives.

Strategic Risks

Go-to-Market Execution: Revenue performance did not meet initial expectations due to go-to-market execution falling short of historically high standards. The transformation of the go-to-market approach has not scaled across the entire enterprise organization at the intended pace.

Leadership Transition: The company is undergoing a leadership transition, including the search for a new Chief Revenue Officer, which may cause temporary disruptions.

Financial Risks and Capital Management

PagerDuty has engaged in several capital management activities, including the issuance of convertible senior notes and the execution of share repurchase programs. In May 2024, the company completed a $100 million share repurchase program and initiated a new $150 million share repurchase program in March 2025. The company also managed its liquidity through cash and cash equivalents totaling $570.8 million as of January 31, 2025, and maintained a strong balance sheet with deferred revenue of $245.8 million.

Financial Performance Highlights for Fiscal Year 2025 (ended January 31, 2025):

Mitigation and Management Strategies

PagerDuty's management is actively addressing these challenges through various strategies:

• Investing in product development to enhance its platform and expand its product offerings.
• Expanding sales and marketing efforts to target enterprise customers and increase market penetration.
• Enhancing customer support to improve retention and growth.
• Considering hedging strategies to mitigate market risks such as foreign currency exchange rate fluctuations.
• Focusing on enterprise accounts and multi-year, multi-product platform partnerships. Multi-product customers now represent 65% of total ARR.

For further insights into PagerDuty's mission, vision, and core values, you can refer to Mission Statement, Vision, & Core Values of PagerDuty, Inc. (PD).

PagerDuty, Inc. (PD) Growth Opportunities

PagerDuty, Inc. (PD) exhibits strong future growth prospects driven by several key factors. These include product innovations, market expansion, strategic initiatives, and competitive advantages.

Analysis of key growth drivers:

• Product Innovation: PagerDuty's continuous investment in its platform, introducing new features and integrations, enhances its value proposition.
• Market Expansion: Expanding its reach into new geographic regions and industries increases its potential customer base.
• Strategic Acquisitions: Strategic acquisitions can bring new technologies and talent, accelerating product development and market penetration.

Future revenue growth projections and earnings estimates:

While specific revenue growth projections and earnings estimates can fluctuate based on market conditions and company performance, several analysts have provided insights based on PagerDuty's recent performance and strategic initiatives. For instance, PagerDuty's Q4 FY24 revenue was reported at $111.3 million, representing a 16.9% year-over-year increase. The full fiscal year 2024 revenue reached $427.2 million, a 22.3% increase compared to the previous year. These figures indicate a strong growth trajectory. The company's focus on enterprise customers, as evidenced by a 23% increase in customers with annual recurring revenue (ARR) over $100,000, also suggests a move towards higher-value contracts and sustained revenue growth.

Strategic initiatives and partnerships that may drive future growth:

• Partnerships: Collaborations with other technology providers can extend PagerDuty's reach and integrate its solutions into broader ecosystems.
• Platform Expansion: Expanding the PagerDuty platform to address adjacent markets, such as incident management and digital operations management, can drive growth.

Competitive advantages that position the company for growth:

• Established Market Position: PagerDuty's first-mover advantage and strong brand recognition in the digital operations management space provide a solid foundation for growth.
• Comprehensive Platform: Its comprehensive platform, encompassing incident management, automation, and analytics, offers a differentiated value proposition.
• Strong Customer Relationships: Long-standing relationships with enterprise customers and a reputation for reliability contribute to customer retention and expansion.

To further understand the core values and mission that drive PagerDuty, Inc., you can explore: Mission Statement, Vision, & Core Values of PagerDuty, Inc. (PD).