“PagerDuty delivered a solid second quarter with revenue growth within our guidance range at 8% and non-GAAP operating margin 4 points above the range at 17%.”
— Jennifer Tejada
03Detailed Report
PD
Company PD
Period
Q2 2025
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 17, 2026
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Executive Summary
PagerDuty reported a solid QQ2 FY2025 with revenue of approximately $116 million, up about 8% year over year, and delivered an above-range non-GAAP operating margin of 17% per management commentary. The company continues to execute its enterprise-first strategy, expanding multi-product, multi-year ARR and achieving a dollar-based net retention (DBNR) of about 106% in Q2, with ARR exiting at $474 million (+10% YoY). The quarter showcased meaningful enterprise-market momentum: new products (AIOps, automation, CSOps) contributed roughly 65% of net new ARR, and the mix shift toward large, strategic contracts has driven higher average deal sizes and improved retention economics, even as SMB there remains a headwind. Management signaled ARR growth above 10% for FY2025 and guided Q3 revenue of $115.5–$117.5 million and full-year revenue of $463–$467 million, with expected operating margins of roughly 13% in Q3 and ~14% for the full year. The firm also highlighted operational resilience during the July outage, accelerated GenAI initiatives (PagerDuty Advance), regulatory demand drivers (e.g., DORA), and a strengthening services-attached dynamic that supports longer-term profitability and free cash flow generation. The balance sheet remains robust, with substantial liquidity and a disciplined capital allocation strategy, including a quarterly buyback and ongoing investment in product and GTM capabilities. Investors should weigh the favorable ARR trajectory and enterprise-proofed product stack against SMB headwinds and longer sales cycles as near-term risks. overall, PD is transitioning toward a higher-visibility, enterprise-centric growth trajectory supported by AI-enabled workflows and a scalable operations cloud.
Key Performance Indicators
Revenue
Increasing
115.94M
QoQ: 4.28% | YoY: 7.73%
Gross Profit
Increasing
95.86M
82.68% margin
QoQ: 4.38% | YoY: 9.20%
Operating Income
Increasing
-16.03M
QoQ: 25.32% | YoY: 38.77%
Net Income
Increasing
-10.91M
QoQ: 54.64% | YoY: 50.52%
EPS
Increasing
-0.14
QoQ: 46.15% | YoY: 41.67%
Revenue Trend
Margin Analysis
Financial Highlights
Revenue and profitability
- QQ2 2025 revenue: $115.935m (GAAP 116.0m reference in call), up ~7.7%–8% YoY per reported metrics.
- Gross profit: $95.856m, with gross margin ~82.7% (GM guidance range 84–86% historically; QQ2 outcome at high end of target; management noted high-end GM in call).
- Operating income: GAAP ≈ -$16.1m in the formal release figures, but the call highlighted an operating profit of $20m (17% of revenue) reflecting either non-GAAP adjustments or presentation differences; management emphasized expense timing (PS rephasing) and headcount shifts to H2 as drivers.
- Net income: GAAP net loss of about -$10.91m; net income margin ≈ -9.41%. EPS (diluted) ≈ -$0.14.
- EBITDA/EBITDA margin: Adjusted metric reported as approximately -$3.90m; EBITDA margin ≈ -3.3% as per the press commentary.
- ARR and DBNR: ARR exiting Q2 at $474m, +10% YoY; DBNR = 106% (guidance to 106%–107% by year-end).
- Net new ARR mix: New products (AIOps, automation, CSOps, premium support) contributed ~65% of net new ARR.
- RPO and revenue recognition: Total RPO ≈ $403m; roughly 70% expected to be recognized in the next 12 months; trailing 12-month billings ≈ $468m, +8% YoY.
- Cash flow and liquidity: Cash, cash equivalents and investments ≈ $599m; net debt ≈ $74.9m; operating cash flow ≈ $36m (≈31% of revenue); free cash flow ≈ $33m (≈29% of revenue).
- Customer metrics: Total paid customers ≈ 15,044; SMB churn remains a challenge; customers spending >$100k ARR ≈ 820 (↑6% YoY); >$500k ARR cohort growth in the low-20s% YoY.
- Shares and capital allocation: Weighted-average diluted shares ≈ 93.29m; repurchased ~1.3m shares under the $100m program; remaining authorized repurchase ≈ $72m through May 2026.
- Guidance inflection: Full-year ARR growth expected to exceed 10%; Q3 revenue growth projected 6–8%; full-year revenue growth 7–8% with mid-teens free cash flow contribution implied by the margin guidance.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
115.94M
7.73%
4.28%
Gross Profit
95.86M
9.20%
4.38%
Operating Income
-16.03M
38.77%
25.32%
Net Income
-10.91M
50.52%
54.64%
EPS
-0.14
41.67%
46.15%
Key Financial Ratios
Gross Profit Margin
Excellent
82.70%
Gross profit margin is exceptional, indicating strong pricing power and operational efficiency
Operating Profit Margin
Weak
-0.14%
Operating margin is below industry norms, profitability concerns
Net Profit Margin
Weak
-0.09%
Net profit margin is below industry norms, profitability concerns
Return on Assets
Weak
-0.01%
Return on assets suggests inefficient capital allocation
Return on Equity
Weak
-0.07%
Return on equity suggests inefficient capital allocation
Current Ratio
Healthy
2.13
Current ratio shows adequate liquidity to meet short-term obligations
Debt to Equity
High Risk
2.80
Debt-to-equity indicates high leverage and elevated financial risk
P/E Ratio
Negative
-44.73x
Negative earnings make P/E ratio not meaningful
Price to Book
High Premium
11.86x
Very high premium suggests asset-light business model or lofty expectations
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