Summary
PagerDuty reported second-quarter fiscal 2023 results for the period ended July 31, 2022, with strong top-line growth but a wider GAAP loss. GAAP revenue was $90.3 million, up 33.6% year over year. GAAP gross profit was $71.9 million, up 29.4%, while gross margin slipped to 79.6%, down 2.6 percentage points. GAAP operating loss was $37.9 million, and the loss widened 33.1% year over year. GAAP operating margin was negative 42.0%, up 0.2 percentage points. Net loss attributable to PagerDuty, Inc. was $38.5 million, and the loss widened 29.8%. Diluted net loss per share was $0.44, and the per-share loss widened 25.7%. For the first six months, revenue was $175.6 million, up 33.9% year over year. The revenue increase came from growth from new and existing customers, with existing customer growth tied to more users and upsell of additional products and services. The gross margin decline was driven by higher amortization of acquired intangible assets, hosting and software costs, and personnel expenses.
The non-GAAP view showed a much smaller loss. Non-GAAP operating loss was $3.4 million, with a non-GAAP operating margin of negative 3.7%. Non-GAAP net loss per share was $0.04. Operating cash flow was $2.8 million, up $14.4 million year over year. Free cash flow was $1.0 million. Capital expenditures were $0.9 million, up 136.8% year over year. Deferred revenue was $169.5 million, up 26.5% year over year. Remaining performance obligations were $166.2 million, up 40.6% year over year. The company's non-GAAP measures exclude stock-based compensation, employer taxes related to employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses, and related items. The free cash flow figure is a non-GAAP liquidity measure and is not a substitute for operating cash flow.
Operationally, paid customers reached 15,174, compared with 14,169 a year earlier. Customers with annual recurring revenue above $100,000 reached 689, compared with 501. Dollar-based net retention rate was 124%, compared with 126%. International revenue was 23% of total revenue, compared with 24%. PagerDuty held its 2022 Global Summit Series, expanded its international presence to Japan, appointed Bill Losch to its Board of Directors, and featured a case study with Freedom Pay. The company named lands and expands with Booking Holdings, Lumen Technologies, Public Storage, Toyota, and Zoom. Management said demand was strong across regions and verticals, and it believes the platform is well positioned in an uncertain macro environment.
Management guided for the third quarter of fiscal 2023 revenue growth of 28% to 31% year over year and non-GAAP net loss per share of $0.04 to $0.03, assuming roughly 89 million shares. For the full fiscal year 2023, the company guided revenue growth of 30% to 31% year over year and non-GAAP net loss per share of $0.12 to $0.10, assuming roughly 89 million shares. The third-quarter revenue growth outlook is below the 33.6% second-quarter growth rate. The full-year outlook points to continued investment and a non-GAAP loss, and management said it remains confident in its ability to execute as it progresses toward profitability.
The filing highlights several risks. PagerDuty pointed to the COVID-19 pandemic, the ability to achieve and maintain future profitability, the ability to attract new customers and retain and sell additional functionality to existing customers, the ability to sustain and manage growth, dependence on a single product, competition, and general global market, political, economic, and business conditions. The company also monitors the Russia-Ukraine conflict and said it does not expect a material impact, though worsening conditions could disrupt the business. PagerDuty maintains a full valuation allowance on its net federal and state deferred tax assets because it concluded it is more likely than not that the deferred tax assets will not be realized. Macro uncertainty remains part of the backdrop. The company said it may need additional equity or debt financing if it cannot generate sufficient cash flows.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2023 | Q1 FY2023 | QoQ | Q2 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $90.3M | $85.4M | +5.7% | $67.5M | +33.6% |
| Gross profit | $71.9M | $69.7M | +3.2% | $55.6M | +29.4% |
| Gross margin | 79.7% | 81.6% | -1.9 pp | 82.3% | -2.6 pp |
| Research & development | $34.0M | $31.3M | +8.7% | $22.9M | +48.5% |
| Sales & marketing | $50.3M | $45.6M | +10.5% | $40.8M | +23.3% |
| General & administrative | $25.4M | $25.3M | +0.6% | $20.3M | +25.3% |
| Total operating expenses | $109.8M | $102.1M | +7.5% | $84.0M | +30.7% |
| Operating income (loss) | -$37.9M | -$32.5M | -16.7% | -$28.5M | -33.1% |
| Operating margin | -42.0% | -38.0% | -4.0 pp | -42.1% | +0.2 pp |
| Net income (loss) | -$38.6M | -$32.8M | -17.6% | -$29.7M | -30.1% |
| Net margin | -42.8% | -38.4% | -4.3 pp | -43.9% | +1.1 pp |
| Diluted EPS | -$0.44 | -$0.38 | -$0.06 | -$0.35 | -$0.09 |
| Net retention rate | 124.0% | 126.0% | -2.0 pp | 126.0% | -2.0 pp |
Risks
The filing adds a risk factor that unfavorable industry or global economic conditions, reductions in information technology spending, rising inflation, supply chain disruptions, labor shortages, and weakening exchange rates could limit growth and hurt results. It cites U.S. annual inflation of approximately 9.1% for June 2022.
MD&A shows cost of revenue increased 53% and research and development expenses increased 48% in FY2023 Q2, while gross margin decreased to 79.6% from 82.3% in FY2022 Q2, down 2.6 percentage points. Operating loss widened to $37.9 million from $28.5 million, and net loss widened to $38.5 million from $29.7 million.
The risk factor says competitors, many larger and with greater financial resources, may lower prices in challenging market conditions to attract customers, and consolidation in certain industries may reduce overall spending on the company's products.
The filing expands on geographic expansion risks: customers outside the United States generated 24%, 24%, and 22% of revenue in fiscal years ended January 31, 2022, 2021, and 2020, and about 29% of full-time employees were outside the United States as of January 31, 2022, creating localization, tax, trade, privacy, labor, and currency risks.
The risk factor and MD&A highlight Russia's invasion of Ukraine, sanctions by the United States, European Union, and other nations, and potential regional conflict. MD&A says Russia customers were immaterial to net assets and revenue for the three and six months ended July 31, 2022, but the conflict could materially impact results if it continues or worsens.
The risk factor says political uncertainty and military actions involving Russia, Ukraine, and surrounding regions heighten the risk of security breaches, computer malware, social-engineering attacks, supply-chain attacks, software bugs, server malfunctions, and other cyber-attacks that could disrupt systems, supply chain, and ability to do business.
MD&A reports the dollar-based net retention rate for all customers decreased to 124% for the last 12 months ended July 31, 2022 from 126% for the last 12 months ended July 31, 2021, indicating softer expansion from existing customers even as revenue grew 33.6% in FY2023 Q2.
SaaS KPIs
All quarters →Free Cash Flow Margin
Non-GAAP Operating Margin
Free Cash Flow
Dollar-Based Net Retention Rate
Total Paid Customers
Non-GAAP Gross Margin
Customers > $100,000 ARR
Summary, forecast, risks and KPIs are extracted from PagerDuty, Inc.'s SEC filings for Q2 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.