Summary
PagerDuty ended fiscal 2021 with a stronger top line but wider losses. Fourth-quarter revenue rose 29.1% year over year to $59.3 million, while full-year revenue climbed 28.4% to $213.6 million. Gross profit for the quarter was $49.9 million, up 26.1%, and full-year gross profit was $182.9 million, up 29.0%. The quarter's gross margin was 84.1%, down 2.0 percentage points from 86.2%. Full-year gross margin was 85.6%, up 0.4 percentage points from 85.2%. The growth came as total dollar-based net retention was 121% and enterprise dollar-based net retention finished above 125%. PagerDuty had over 13,800 customers at January 31, 2021, including 426 customers with more than $100,000 in ARR and 26 with more than $1 million in ARR. The 10 largest customers represented about 12% of fiscal 2021 revenue, and total ARR churn was less than 5% of beginning ARR.
Profitability moved the other way. GAAP operating loss widened to $18.4 million in the quarter from $11.8 million a year earlier. The full-year operating loss widened to $66.3 million from $55.6 million. GAAP net loss widened to $22.1 million in the quarter from $10.4 million, and the full-year net loss widened to $68.9 million from $50.3 million. GAAP diluted net loss per share for the full year was -$0.87, compared with -$0.77. Operating margin was -31.0% in the quarter, down from -25.6%, though full-year operating margin improved to -31.0% from -33.4%. The company still generated cash. Operating cash flow was $3.4 million in the quarter, up from $1.8 million, and $10.1 million for the full year, up from negative $0.2 million. Capital expenditures were $0.6 million in the quarter and $4.0 million for the full year, down from $2.0 million and $5.2 million, respectively. Free cash flow, a non-GAAP measure, was $2.3 million for the quarter and $5.2 million for the full year.
Operational momentum was evident in several areas. Deferred revenue was $130.0 million at January 31, 2021, up 40.4% from $92.6 million. Remaining performance obligations were $120.5 million, up 59.2% from $75.7 million. PagerDuty said it had its eighth consecutive quarter in which about a third of enterprise customers expanded. The quarter included record transaction growth in the mid-market, the largest one-time multi-year expansion in company history, and the first million-dollar contract in EMEA. Annual recurring revenue from the PagerDuty Digital Operations plan doubled for the year and now accounts for over 20% of total ARR. Users grew 56% in security and 40% in customer service year over year. The platform now has over 530 integrations. PagerDuty also completed the Rundeck acquisition on October 1, 2020.
Guidance points to continued growth but no near-term GAAP profitability target. For the next quarter, management guided revenue growth of 23% to 27% year over year, with non-GAAP net loss per share of $0.10 to $0.09 on about 83 million shares. For the full fiscal year, guidance is revenue growth of 24% to 26%, with non-GAAP net loss per share of $0.43 to $0.36 on about 84 million shares. The company does not reconcile forward-looking non-GAAP net loss per share to GAAP because certain items are outside its control or cannot be reasonably predicted.
The main risks remain familiar. The 10-K flags the COVID-19 pandemic as a source of uncertainty for demand, sales cycles, customer retention, and cash flow. PagerDuty has seen increased churn and a decline in users that it ties to COVID-19, and it may see more if customers reduce workforces. Small and medium business demand has been more variable, and the company could face reduced customer spend, shorter contract duration, or longer payment terms. The business also relies on a single product, On-Call Management, for the substantial majority of revenue; competition is intense; and the company has a history of losses. Management believes existing cash and investments will support working capital for at least the next 12 months, but it may need additional financing if growth plans require more capital.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2021 | Q3 FY2021 | QoQ | Q4 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $59.3M | $53.8M | +10.3% | $45.9M | +29.1% |
| Gross profit | $49.9M | $46.1M | +8.2% | $39.6M | +26.1% |
| Gross margin | 84.1% | 85.7% | -1.6 pp | 86.2% | -2.0 pp |
| Research & development | $17.9M | $16.2M | +10.6% | $13.9M | +29.0% |
| Sales & marketing | $33.9M | $34.0M | -0.4% | $25.0M | +35.7% |
| General & administrative | $16.5M | $17.7M | -6.8% | $12.5M | +32.2% |
| Total operating expenses | $68.3M | $67.9M | +0.5% | $51.3M | +33.0% |
| Operating income (loss) | -$18.4M | -$21.8M | +15.8% | -$11.8M | -56.5% |
| Operating margin | -31.0% | -40.6% | +9.6 pp | -25.6% | -5.4 pp |
| Net income (loss) | -$22.1M | -$20.6M | -7.5% | -$10.4M | -112.1% |
| Net margin | -37.4% | -38.3% | +1.0 pp | -22.7% | -14.6 pp |
| Net retention rate | 121.0% | — | — | 122.0% | -1.0 pp |
Risks
The COVID-19 pandemic has reduced IT spending and delayed digital transformation initiatives, particularly among small and medium businesses and customers in transportation, hospitality, retail and energy. MD&A states the company has experienced an increase in churn and a decline in users that it believes is associated with COVID-19 and may continue to see reduced customer spend or contract duration.
PagerDuty has a history of operating losses and expects costs and expenses to increase. For FY2021 year to date, net loss widened to $68.9 million from $50.3 million in FY2020 year to date, and operating loss widened to $66.3 million from $55.6 million.
Substantially all revenue is derived from subscriptions to the On-Call Management product, and the broader platform and other products may not achieve market acceptance. A decline in demand for On-Call Management or failure to sell additional products would harm operating results more than if revenue were diversified.
The market for real-time operations solutions is highly fragmented and competitive, with competitors including Atlassian through OpsGenie, Splunk through VictorOps, and parts of ServiceNow's product suite. Larger competitors can bundle competing solutions at lower prices or no additional cost, contributing to pricing pressures.
Customers have no obligation to renew subscriptions, and renewal or expansion rates may decline due to spending levels, dissatisfaction, user declines, pricing changes, or competition. The dollar-based net retention rate was 121% for FY2021 compared to 122% for FY2020.
The company states its security measures have on occasion in the past been compromised and may be in the future, and its platform processes sensitive customer data. A security incident could cause litigation, indemnity obligations, business interruption, negative publicity and loss of customers.
As PagerDuty targets new and existing mid-market and enterprise customers, sales cycles, forecasting and deployment processes become less predictable and require greater time and expense. These customers often require multiple management approvals, and new sales personnel represent the majority of the sales force.
PagerDuty faces intense competition for software developers, sales personnel and executives, and immigration limits on H-1B and other visas may affect recruiting. The loss of CEO Jennifer Tejada or other key employees could harm the business, and the company does not have key person insurance.
The Rundeck acquisition completed October 1, 2020 creates integration risks, including difficulty retaining personnel and customers, unknown liabilities, diversion of management attention, and potential goodwill impairment if expected returns are not achieved.
As of January 31, 2021, PagerDuty is no longer an emerging growth company, so it must comply with Section 404 auditor attestation requirements and other public company reporting obligations. This increases legal, accounting and compliance costs and may strain management and systems.
The first fiscal quarter is usually the lowest billings and bookings quarter, with billings and bookings typically lower than the prior fourth fiscal quarter due to customer procurement and budgeting cycles. This seasonality is expected to continue as PagerDuty targets larger enterprise customers.
PagerDuty issued convertible senior notes in June 2020 and has contractual obligations including the notes, operating leases and purchase commitments. It may need additional equity or debt financing, which could be unavailable on acceptable terms or result in dilution.
PagerDuty's recent rapid growth may not be indicative of future growth, and it expects its revenue growth rate to decline as the business matures. Managing continued growth may strain resources, and the company plans substantial investments in sales, marketing, technology infrastructure, product development and international expansion.
SaaS KPIs
All quarters →Free Cash Flow Margin
Non-GAAP Operating Margin
Free Cash Flow
Dollar-Based Net Retention Rate
Non-GAAP Gross Margin
Customers > $100,000 ARR
Total Customers
Summary, forecast, risks and KPIs are extracted from PagerDuty, Inc.'s SEC filings for Q4 FY2021 (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.