Summary
PagerDuty's fiscal 2026 second quarter produced a GAAP profit. Revenue was $123.4 million, up 6.4% year over year. Gross profit was $104.4 million, up 8.9%, and gross margin was 84.6%, up 1.9 percentage points. Operating income was $3.6 million, and operating margin was 2.9%, up 16.7 percentage points from the prior-year quarter. Net income was $9.6 million, and diluted EPS was $0.10, both up from negative prior-year figures. Year-to-date revenue was $243.2 million, up 7.1%, and year-to-date net income was $2.4 million, a swing to a profit. Non-GAAP results were also reported. Non-GAAP operating income was $31.4 million and non-GAAP operating margin was 25.4%, compared with $20.1 million and 17.3% in the prior-year quarter. Non-GAAP diluted EPS was $0.30.
Cash generation held up, though not uniformly. Operating cash flow was $34.0 million in the quarter, down 5.0% year over year. Year-to-date operating cash flow was $64.6 million, flat. Free cash flow was $30.2 million. Capital expenditures were $0.9 million, up 37.2%. The customer base expanded. Annual recurring revenue reached $499 million, up 5%. Customers with ARR over $100 thousand totaled 868, up 6% from 820. Total paid customers were 15,322, compared with 15,044. Free and paid customers totaled more than 33,000, roughly 13% growth since July 31, 2024. Dollar-based net retention rate was 102%, compared with 106%. Remaining performance obligations were $425 million, up 5.5%. PagerDuty expects to recognize about $295 million, or 69%, over the next 12 months and $100 million, or 24%, over months 13 to 24. Deferred revenue was $229.9 million, up 5.5%.
Guidance covers both the next quarter and the full fiscal year. For the third quarter of fiscal 2026, PagerDuty expects total revenue growth of 4% to 6% year over year. Third-quarter non-GAAP net income per diluted share is expected to be $0.24 to $0.25, assuming approximately 94 million diluted shares and a non-GAAP tax rate of 22%. For the full fiscal year 2026, the company expects total revenue growth of 5% to 6% year over year, and full-year non-GAAP net income per diluted share of $1.00 to $1.04, up from $0.95 to $1.00. The company also named Todd McNabb as Chief Revenue Officer, effective September 29, 2025, to lead global go-to-market strategy.
The quarter also included product and market recognition. PagerDuty was named a Leader and Outperformer in the 2025 GigaOm Radar for Incident Response Platforms, a leader in the GigaOm Radar for AIOps, and an AIOps Platform of the Year in the 2025 AI Breakthrough Awards. The company announced an AI-powered integration between PagerDuty Advance and Amazon Q Business. Under the 2025 Share Repurchase Program, no shares had been repurchased as of July 31, 2025, and $150.0 million remained available. In August 2025, the board approved an additional $50.0 million, raising the program to $200.0 million.
Risks remain. The company cites worldwide macroeconomic conditions, including global inflation and heightened interest rates, tariffs and trade wars, existing and new laws and regulations, and economic uncertainty. Operating risks include the ability to achieve and maintain future profitability, sustain and manage growth, attract new customers, and retain and sell additional functionality and services to existing customers. PagerDuty also depends on revenue from a single product, faces an increasingly competitive market, and must manage seasonality. Other risks include rapid technology changes, the ability to expand marketing and sales capacities, the ability to enhance the platform, unfavorable industry or global economic conditions, reductions in information spending, international trade policies, the accuracy of market opportunity estimates, data security breaches, service interruptions, and third-party compatibility.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $123.4M | $119.8M | +3.0% | $115.9M | +6.4% |
| Gross profit | $104.4M | $100.6M | +3.8% | $95.9M | +8.9% |
| Gross margin | 84.6% | 84.0% | +0.6 pp | 82.7% | +1.9 pp |
| Research & development | $30.9M | $34.0M | -9.3% | $35.1M | -11.9% |
| Sales & marketing | $44.5M | $50.0M | -11.2% | $51.0M | -12.8% |
| General & administrative | $25.5M | $26.9M | -5.1% | $25.8M | -1.3% |
| Total operating expenses | $100.8M | $110.9M | -9.1% | $111.9M | -9.9% |
| Operating income (loss) | $3.6M | -$10.3M | +134.5% | -$16.0M | +122.2% |
| Operating margin | 2.9% | -8.6% | +11.5 pp | -13.8% | +16.7 pp |
| Net income (loss) | $9.4M | -$7.4M | +227.6% | -$11.2M | +184.2% |
| Net margin | 7.6% | -6.2% | +13.8 pp | -9.7% | +17.3 pp |
| Diluted EPS | $0.10 | -$0.07 | +$0.17 | -$0.14 | +$0.24 |
| Customers | 15,044 | 15,120 | -0.5% | 15,146 | -0.7% |
| Net retention rate | 102.0% | 104.0% | -2.0 pp | 106.0% | -4.0 pp |
Risks
Dollar-based net retention rate declined to 102% for the 12 months ended July 31, 2025 from 106% for the 12 months ended July 31, 2024, indicating weaker expansion and higher churn among existing paid customers even as quarterly revenue grew 6.4% and ARR reached $498.9 million. Because revenue growth is attributed primarily to growth from existing customers, a further decline in retention would pressure future growth.
MD&A states that business and financial performance has been and may continue to be subject to worldwide macroeconomic conditions, specifically naming global inflation and heightened interest rates, tariffs and trade wars, existing and new laws and regulations, and economic uncertainty and volatility in the jurisdictions where PagerDuty operates.
The quarter swung to operating income of $3.6 million from a prior-year quarter loss of $16.0 million, and consolidated net income was $9.4 million versus a $11.2 million loss, but the improvement rested on a 9.9% decrease in total operating expenses driven largely by headcount reductions and lower stock-based compensation rather than by revenue acceleration.
Non-GAAP reconciliations disclose $2.3 million of shareholder matters costs for the six months ended July 31, 2025, described as third-party legal, consulting and advisory fees related to shareholder activity and a cooperation agreement, indicating an active shareholder engagement situation outside the ordinary course of business.
Interest income decreased 18.2% in the quarter to $6.1 million and 16.1% year to date to $12.2 million, attributed to lower interest-earning cash balances, while cash, cash equivalents and restricted cash fell $7.1 million over the six months ended July 31, 2025 and financing activities used $63.0 million largely for repayment of the 2025 Notes.
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 Operating Income
Annual Recurring Revenue (ARR)
Free and Paid Customers
Remaining Performance Obligations
Customers with ARR over $100K
Summary, forecast, risks and KPIs are extracted from PagerDuty, Inc.'s SEC filings for Q2 FY2026 (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.