Executive Summary
PagerDuty reported QQ1 2026 revenue of $119.8 million, up 8% year over year, within guidance, and delivered a non-GAAP operating margin of 20%—well above the stated target by 500 basis points. Annual recurring revenue (ARR) grew to $496 million, up 7% YoY, with trailing twelve months billings of $492 million (+7% YoY) and RPO of $430 million (+11% YoY). Despite a stronger top-line, GAAP results showed an operating loss of $10.3 million and net income of -$6.5 million, reflecting ongoing investments to transform the go-to-market (GTM) motion and scale enterprise relationships. Management emphasized a deliberate enterprise sales transformation, including a shift to more strategic, cross-company customer relationships, deeper post-sale engagement, and a pricing evolution to reduce friction and broaden AI/automation capabilities across all incident-management plans.
Management framed the QQ1 2026 results as transitional in the GTM model, with execution gaps tied to rep transitions and territory realignment. The company highlighted meaningful progress in new logo generation, enterprise expansion, and strategic partnerships (notably AWS) that underpin a path to durable growth and GAAP profitability in FY2027. The near-term outlook calls for cautious optimism: Q2 revenue guidance of $122.5–$124.5 million (6–7% growth) and full-year 2026 revenue guidance of $493–$499 million (5–7% growth) with GAAP operating margins expected to reach 20–21%. PagerDuty also announced a $150 million share repurchase program to support capital allocation. Investors should monitor the pace of enterprise rep ramp, the realization of up-sell/expansion within high-ARPU accounts, and the ongoing monetization of AI-enabled platform capabilities.
Key Performance Indicators
Key Insights
Revenue: QQ1 2026 revenue of $119.805 million, YoY growth of 7.8% (reported as 8% in earnings call). QoQ not disclosed in available data.
Gross margin: 86% in QQ1 2026 (high end of guidance range 84–86%); GAAP gross margin implied by income statement of ~83.99% based on segment data provided, but management stated 86% on the call.
Operating income: QQ1 2026 GAAP operating loss of $10.327 million, operating margin -8.62%; Non-GAAP operating income not disclosed in the dataset, but management hi...
Financial Highlights
Revenue: QQ1 2026 revenue of $119.805 million, YoY growth of 7.8% (reported as 8% in earnings call). QoQ not disclosed in available data.
Gross margin: 86% in QQ1 2026 (high end of guidance range 84–86%); GAAP gross margin implied by income statement of ~83.99% based on segment data provided, but management stated 86% on the call.
Operating income: QQ1 2026 GAAP operating loss of $10.327 million, operating margin -8.62%; Non-GAAP operating income not disclosed in the dataset, but management highlighted non-GAAP operating margin of 20% for the quarter.
ebitda: QQ1 2026 EBITDA of -$2.36 million (~-2.0% of revenue).
ebitdaratio: -0.20%
Net income: QQ1 2026 net income of -$6.497 million, net income margin -5.42%.
eps: GAAP EPS -$0.0711; Diluted EPS -$0.0711.
Weighted average shares: 91.374 million (basic and diluted).
ARR: $496 million exiting Q1 2026, up 7% YoY.
Dollar-based net retention (DBNR): 104% (guidance range 103–105% for FY2026).
Paid customers: 15,247 in Q1 2026, net adds +27 (strongest quarterly paid customer additions in eight quarters).
Hedge: International revenue contributed 28% of total revenue, with international revenue growing 11% YoY.
Bookings/Billings: Trailing twelve months billings of $492 million, up 7% YoY; Q2 trailing billings expected ~7% growth; back-half improvement anticipated as GTM ramps.
RPO: ~ $430 million, up 11% YoY, with ~70% ($302 million) expected to be recognized in the next 12 months.
Cash flow: Operating cash flow $31 million (26% of revenue); free cash flow $29 million (24% of revenue). Cash and investments totaled approximately $597 million at quarter-end (cash & cash equivalents $371.8 million; short-term investments $225.3 million).
Liquidity/Capital allocation: Ended QQ1 with ~ $597 million in cash and investments; repurchase program of up to $150 million announced.
Roadmap/AI: Three AI agents to be launched in the current quarter; AI-enabled products including AI Scribe and Teams/Zoom integration to accelerate incident resolution and organizational learning. AWS collaboration expanded to include Q-led services (Amazon Q, Bedrock, AWS Incident Manager) with nearly 6,000 joint customers.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
119.81M |
7.77% |
-1.35% |
| Gross Profit |
100.62M |
9.57% |
-0.84% |
| Operating Income |
-10.33M |
51.88% |
11.88% |
| Net Income |
-6.50M |
72.99% |
38.73% |
| EPS |
-0.07 |
72.65% |
40.75% |
Management Commentary
Strategy and AI monetization
- CEO Jennifer Tejada emphasized monetizing AI through PagerDuty Advance and broader AI/automation capabilities, noting that pricing evolution will reduce friction and enable cross-product usage across the platform. Quote: “Remain on track to launch three additional AI agents this quarter.” (Jennifer Tejada)
- The company highlighted partnerships with AWS and FedRAMP expansion as critical to expanding the addressable market, including public sector expansion and federation with federal agencies (FedRAMP Low; pursuing Moderate). Quote: “Our platform now seamlessly integrates with Amazon Q, Bedrock, and AWS Incident Manager, serving nearly 6,000 joint customers.” (Jennifer Tejada; Howard Wilson)
- AI adoption in native AI verticals is gaining traction, with enterprise customers pursuing multi-year, multi-product deployments, reinforcing the relevance of PagerDuty’s operations cloud for AI-driven enterprises. Quote: “The traction we're gaining in emerging native AI vertical demonstrates that our platform is mission-critical for companies building and scaling AI operations.” (Jennifer Tejada)
Operations and GTM execution
- QQ1 reflected transitional dynamics in GTM execution, including rep ramp and territory realignment; management described steps taken to improve post-sale engagement and professional services, aiming to accelerate value realization and platform adoption.
- The enterprise sales transformation is underway with >60% of enterprise reps in place for at least one year by end of Q2; management expects this to drive improved enterprise contribution in H2 FY2026. Quote: “More than 60% of our enterprise reps will have been in their role for at least a full year by the end of Q2.” (Howard Wilson)
- Management signaled improved visibility from multi-product, multi-year deals and a broadened pipeline, suggesting continued expansion opportunities in AI ops, incident management, and automation. CEO commentary highlighted new logos and expansion within large accounts as evidence of demand for PagerDuty’s platform beyond traditional incident management.
Financial and cash-flow metrics
- QQ1 2026 results showed solid profitability discipline on a non-GAAP basis (20% non-GAAP operating margin), with GAAP profitability still in transition. CFO Howard Wilson framed guidance as prudent given Q1 GTM transition headwinds and ramp dynamics for the back half of the year.
- Cash generation remained strong with operating cash flow of $31 million and free cash flow of $29 million; liquidity remains robust with roughly $597 million in cash and investments and a $150 million buyback program.
- Management underscored that Q2 and H2 improvements in bookings/ARR are expected to flow into stronger top-line and durable profitability in the next fiscal year.
“More than 60% of our enterprise reps will have been in their role for at least a full year by the end of Q2.”
— Howard Wilson, CFO
“In the first quarter, PagerDuty delivered revenue of $120 million, representing 8% growth at the top of our guidance range.”
— Jennifer Tejada, CEO
Forward Guidance
Quantitative outlook:
- Q2 FY2026 revenue guide: $122.5–$124.5 million (6%–7% growth).
- Full-year FY2026 revenue guide: $493–$499 million (5%–7% growth).
- Q2 operating margin guide: 17% (GAAP); Full-year non-GAAP operating margin target implied at 20–21% (according to management guidance).
- DBNR target range for FY2026: 103%–105%.
- Trailing twelve months billings expected to be ~7% growth in Q2 with a similar trajectory into H2; ARR exiting FY2026 is guided to reflect expansion and sustainable growth.
Qualitative outlook:
- Management expects the enterprise GTM transformation (elevated seniority, more strategic, cross-functional customer engagement, and enhanced post-sale practices) to deliver improved retention and greater expansion in the second half of FY2026 and into FY2027, aided by a higher-value enterprise value-centric selling motion.
- AI monetization remains the primary growth catalyst, with expanding AI product portfolio (AI Scribe, agent-based workflows) and broader ecosystem partnerships (AWS, FedRAMP, public sector partnerships).
- Key risks include: (1) efficiency gaps during revamps of the GTM engine and rep ramp; (2) macro uncertainty impacting large enterprise budgets and multi-year commitments; (3) potential execution delays in monetizing AI capabilities across the entire platform; (4) competitive dynamics in the incident management and AI ops markets.
Assessment of achievability:
- With >60% of enterprise reps in their roles for >1 year by Q2 and a broader suite of AI-enabled offerings, management’s guidance is plausible if GTM execution accelerates, expansion within existing enterprise deals accelerates, and customers realize material value from AI capabilities to justify multi-year commitments. The AWS collaboration and FedRAMP momentum provide credible catalysts to meet the backlog of enterprise opportunities. Investors should monitor quarterly bookings, ARR growth, and net retention progression as leading indicators of execution success.