PagerDuty Inc (PD) Q3 2025 Earnings Report

PagerDuty reported a solid QQ3 2025 quarter, with revenue of $118.95 million and 9% year-over-year growth, supported by continued strength in annual recurring revenue (ARR) and a high level of retention driven by multiproduct adoption. Total ARR reached $483 million, up 10% year-over-year for the fourth consecutive quarter, underscored by a 107% dollar-based net retention (DBNR) and stability across both Enterprise and Commercial segments. Management highlighted ongoing progress in multi-year, multi-product deals and noted a higher contribution from high-value segments, aided by product expansion in AIOps, Automation, and Customer Service Ops. Importantly, PagerDuty Advance, the firm’s generative AI offering, has moved into general availability, with the first paid customers, signaling a pathway to monetization and pricing power as AI capabilities deepen across the Operations Cloud. The quarter featured meaningful AI-driven product enhancements (Operations Console, Global Intelligent Alert Grouping, expanded automation library) and early quantification of the ROI benefits from multi-product adoption (Forrester reported ~250% ROI over three years with payback under one year). These factors support the thesis that higher attach rates and larger deal sizes can drive faster ARR reacceleration into FY26, especially as EMEA stabilizes and enterprise sales discipline tightens. On the profitability front, GAAP results remained negative with operating income of -$10.29 million and net income of -$5.92 million, while non-GAAP profitability showed meaningful improvement (management cites a non-GAAP operating margin around 21%). Free cash flow stood at $19 million, with operating cash flow of $22 million, underscoring ongoing cash generation even as the company continues to invest in sales capacity and new product development. Guidance implies modest near-term growth tailwinds but highlights the risk of large deals deferring into FY26. For Q4, PagerDuty guided $118.5–$120.5 million in revenue (7%–8% growth) and $0.15–$0.16 in GAAP diluted net income per share, with Q4 operating margins around 13%. For full fiscal year 2025, the midpoint revenue guidance was raised to $464.5–$466.5 million with non-GAAP earnings per share of $0.78–$0.79 and an implied 16% operating margin. The company expects ARR growth to reaccelerate into FY26, supported by rising retention, a strengthened pipeline, and ongoing multi-product expansion. Investors should monitor the pace of large-deal conversions, PD Advance monetization, and how quickly pipeline-to-close translates into revenue in FY26.