Summary
PagerDuty closed the fiscal 2023 third quarter with revenue of $94.2 million, up 31.3% from the prior-year quarter. Year-to-date revenue reached $269.8 million, up 33.0%. Growth came from a mix of new customers and expansion inside the existing base, with more users and more products sold into accounts already on the platform. The quarter ended with 15,265 paid customers, up from 14,486 a year earlier, and 710 customers generating more than $100,000 in annual recurring revenue, up from 543. Dollar-based net retention was 123%, down from 124%, and international revenue was 23% of the total, down from 24%.
Customer wins and expansions in the period included Centene, Gong, IBM, OSI Systems, PG&E, Samsung, Solera Holding, Vanguard, Worldline, and Zoom. On the product side, the company shipped flexible incident workflows, AIOps-powered alert management, and customer-facing status pages, and released Process Automation for Amazon Web Services to the AWS Marketplace. It also named a CIO and a CISO.
GAAP profitability remains the harder story. Gross profit was $76.2 million, up 27.6%, but gross margin fell to 80.9% from 83.2%. Amortization tied to the Catalytic acquisition, higher personnel costs, and rising hosting and software expenses pushed cost of revenue up faster than sales. Operating loss was $32.5 million, wider than a year earlier, and the operating margin was negative 34.5%, flat against the prior-year figure. Net loss attributable to PagerDuty, Inc. was $32.5 million, also wider, and diluted loss per share was $0.36 against $0.31. Through nine months, net loss attributable to PagerDuty, Inc. reached $103.9 million, wider than the prior-year period.
Non-GAAP results tell the opposite story. Non-GAAP operating income was $3.0 million, a 3.2% operating margin, and management said non-GAAP profitability arrived a quarter earlier than previously guided. That margin expanded by 1,000 basis points over the year-ago period, and non-GAAP net income per diluted share was $0.04.
Cash generation slipped. Operating cash flow was negative $0.4 million, down from positive $2.65 million a year earlier, and free cash flow was negative $2.3 million. Through nine months, operating cash flow was negative $0.6 million, an improvement from negative $7.4 million in the prior-year period. Capital expenditures were $0.8 million for the quarter, up from $0.1 million, mostly for computers and office space. Deferred revenue finished at $179.7 million, up 25.8%, and remaining performance obligations were $174.3 million, up 41.7%.
Guidance points to slower growth ahead. For the fourth quarter of fiscal 2023, PagerDuty expects revenue of $98.0 million to $100.0 million, growth of 25% to 27% year over year, and non-GAAP net income per diluted share of $0.02 to $0.03 on roughly 102 million diluted shares. For the full fiscal year 2023, revenue guidance is $368.0 million to $370.0 million, growth of 31%, with a non-GAAP net loss per share of $0.01 to $0.00 on approximately 90 million basic shares and 101 million diluted shares. The quarterly guide implies a deceleration from the 31.3% growth reported in the third quarter.
The risk list is familiar but worth repeating. Management pointed to a volatile macroeconomic backdrop, continued uncertainty from COVID-19, and the Russia-Ukraine conflict, which could cause broader economic disruption. The company also names its dependence on a single product, competition in an increasingly crowded market, and the challenge of retaining customers and sustaining growth. Net retention of 123% is still high, but it is lower than the 124% reported a year ago, and the fourth-quarter revenue guide is below the growth rate posted this quarter.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2023 | Q2 FY2023 | QoQ | Q3 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $94.2M | $90.3M | +4.4% | $71.8M | +31.3% |
| Gross profit | $76.2M | $71.9M | +6.0% | $59.7M | +27.6% |
| Gross margin | 80.9% | 79.7% | +1.2 pp | 83.2% | -2.3 pp |
| Research & development | $35.0M | $34.0M | +2.9% | $24.6M | +42.6% |
| Sales & marketing | $47.1M | $50.3M | -6.4% | $40.2M | +17.3% |
| General & administrative | $26.6M | $25.4M | +4.7% | $19.8M | +34.4% |
| Total operating expenses | $108.7M | $109.8M | -0.9% | $84.5M | +28.6% |
| Operating income (loss) | -$32.5M | -$37.9M | +14.1% | -$24.8M | -31.1% |
| Operating margin | -34.5% | -42.0% | +7.4 pp | -34.6% | +0.0 pp |
| Net income (loss) | -$32.8M | -$38.6M | +15.0% | -$26.3M | -24.5% |
| Net margin | -34.8% | -42.8% | +8.0 pp | -36.7% | +1.9 pp |
| Diluted EPS | -$0.36 | -$0.44 | +$0.08 | -$0.31 | -$0.05 |
| Net retention rate | 123.0% | 124.0% | -1.0 pp | 124.0% | -1.0 pp |
Risks
Negative global economic conditions, rising inflation and interest rates, supply chain disruptions, and labor shortages could reduce IT spending and demand; competitors with greater financial resources may lower prices during challenging market conditions.
Cost of revenue rose 50% in FY2023 Q3, gross margin declined 2.3 pp to 80.9% from 83.2%, and operating loss widened by $7.7 million, or 31.1%, driven by higher personnel costs, acquisition amortization, and hosting costs. Continued cost growth may pressure profitability and cash flow.
PagerDuty plans further geographic expansion while customers outside the United States generated 24% of revenue in fiscal 2022 and about 29% of full-time employees were outside the United States as of January 31, 2022, exposing it to currency, tax, regulatory, and operational challenges.
Russia's invasion of Ukraine and related sanctions create global security and economic uncertainty, and the filing states PagerDuty and third parties may face heightened risk of security breaches, malware, and cyberattacks; MD&A says current Russia customer exposure is immaterial but a worsening conflict could materially impact results.
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
Non-GAAP Operating Income
Customers > $100K ARR
Summary, forecast, risks and KPIs are extracted from PagerDuty, Inc.'s SEC filings for Q3 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.