Summary
PagerDuty posted fourth quarter revenue of $121.4 million, up 9.3% year over year. Full year revenue climbed 8.5% to $467.5 million. Gross margin improved to 83.6% in the quarter from 81.7% a year earlier, an increase of 1.9 percentage points. For the full year, gross margin was 83.0% versus 81.9%, up 1.0 percentage point. Quarterly gross profit was $101.5 million, up 11.8%.
The bottom line improved sharply, helped by expense discipline. The loss from operations was $11.7 million in the quarter, compared with $33.4 million a year earlier, and operating margin was negative 9.6% versus negative 30.1%. For the full year, the loss from operations was $59.8 million, and operating margin was negative 12.8% against negative 22.3%. Net loss narrowed to $8.8 million in the quarter from $28.2 million, and to $42.7 million for the full year from $75.2 million. Full year diluted loss per share was $0.59, better than $0.89. On a non-GAAP basis, operating income was $22.3 million for the quarter at an 18.3% margin and $82.7 million for the year at a 17.7% margin. The MD&A attributes part of the expense improvement to general and administrative costs falling for the year, largely because $8.7 million of prior year real estate impairment charges did not repeat. Sales and marketing rose 2.6% and research and development rose 1.2%.
Cash generation was a bright spot. Operating cash flow was $31.4 million in the quarter, up 41.7%, and $117.9 million for the full year, up 63.8%. Free cash flow, a non-GAAP measure, came to $28.6 million for the quarter and $108.4 million for the year. Cash, cash equivalents, and investments stood at $570.8 million as of January 31, 2025. Capital expenditures were $1.1 million in the quarter and $2.8 million for the full year.
Backlog and customer metrics tell a more mixed story. Remaining performance obligations reached $440.0 million, up 78.1% from $247.0 million a year ago, and management expects to recognize about $302 million, or 69%, of that over the next 12 months. That balance includes $128 million of remaining non-cancelable performance obligations from contracts with an original term of less than 12 months. Deferred revenue was $245.8 million, up 7.7%. Annual recurring revenue grew 9% year over year to $494 million. Customers with ARR above $100 thousand increased 6% to 849 from 804, and the company counts 72 customers above $1.0 million in ARR. Dollar-based net retention was 106%, down from 107%, and total paid customers were 15,114 against 15,039. Free and paid customers exceeded 31,000, roughly 10% growth.
PagerDuty also stepped up capital returns. The board authorized a new $150 million share repurchase program, replacing the 2024 program, which was completed in November 2024 after the company bought 5,223,071 shares at an average price of $19.15 for $100.0 million. First quarter fiscal 2026 guidance is a range of $118.0 million to $120.0 million, growth of 6% to 8%, with non-GAAP net income per diluted share of $0.18 to $0.19. For the full fiscal year 2026, the company guides to a range of $500.0 million to $507.0 million, growth of 7% to 8%, and non-GAAP net income per diluted share of $0.90 to $0.95. Risks include macroeconomic conditions, an increasingly competitive market, heavy dependence on a single product that accounts for a significant majority of revenue, and the work required to attract new customers and expand within the existing base. Management said the quarter's AI innovation positions the company to accelerate enterprise momentum in the second half of fiscal 2026.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $121.4M | $118.9M | +2.1% | $111.1M | +9.3% |
| Gross profit | $101.5M | $98.7M | +2.8% | $90.8M | +11.8% |
| Gross margin | 83.5% | 83.0% | +0.6 pp | 81.7% | +1.9 pp |
| Research & development | $34.6M | $34.3M | +1.0% | $35.5M | -2.6% |
| Sales & marketing | $53.1M | $49.3M | +7.7% | $53.6M | -1.0% |
| General & administrative | $25.5M | $25.4M | +0.3% | $35.0M | -27.2% |
| Total operating expenses | $113.2M | $109.0M | +3.9% | $124.2M | -8.9% |
| Operating income (loss) | -$11.7M | -$10.3M | -13.9% | -$33.4M | +64.9% |
| Operating margin | -9.7% | -8.7% | -1.0 pp | -30.1% | +20.4 pp |
| Net income (loss) | -$8.9M | -$6.1M | -44.9% | -$28.8M | +69.2% |
| Net margin | -7.3% | -5.2% | -2.2 pp | -25.9% | +18.6 pp |
| Diluted EPS | -$0.12 | -$0.07 | -$0.05 | -$0.33 | +$0.21 |
| Net retention rate | 106.0% | 107.0% | -1.0 pp | 107.0% | -1.0 pp |
Risks
The market for digital operations solutions is highly fragmented and competitors may more successfully incorporate Emerging AI Technologies such as generative AI and agentic AI, gain superior access to technologies, or achieve higher market acceptance. The filing names ServiceNow, Atlassian, and Splunk (acquired by Cisco) as competitors that can bundle competing solutions at lower or no additional cost, while PagerDuty is building AI capabilities into products such as PagerDuty Advance and AIOps.
Larger enterprise transactions have longer, less predictable sales cycles and greater upfront costs. PagerDuty disclosed that in the quarter ended October 31, 2024, several large enterprise deals were delayed due to extended procurement processes and sales cycles, which negatively impacted results, and the business increasingly depends on closing larger, more complex enterprise transactions.
The dollar-based net retention rate was 106% for the fiscal year ended January 31, 2025, down from 107% for fiscal 2024 and 120% for fiscal 2023. Customers have no obligation to renew after their subscription period, and failure to retain or expand could cause revenue and results to decline if renewal or expansion rates fall below market expectations.
The digital operations market is highly fragmented and competitive, with in-house solutions, open-source software, and established providers such as ServiceNow, Atlassian, and Splunk. Some competitors offer lower prices, bundle competing solutions, or have greater resources, and open-source alternatives can reduce demand and put price pressure on PagerDuty's offerings.
The current macroeconomic environment has made it more difficult to attract new customers and expand with existing customers, with customers displaying a higher level of scrutiny with enterprise software spending and requiring additional sales support. Inflation, interest rates, and reduced IT spending could also limit growth and cause customers to reduce budgets or delay purchases.
Sales of subscriptions to incident management offerings account for a significant majority of revenue, so any decline in demand for that product, failure of broader platform products to achieve market acceptance, or pricing pressure would harm results more seriously than if revenue were diversified. The filing also notes sensitivity to competitor prices and inability to release enhanced versions on time.
PagerDuty is increasingly building AI capabilities into products including PagerDuty Advance and AIOps. Emerging AI Technologies may be insufficient, biased, inaccurate, or of poor quality, and complying with multiple AI regulations across jurisdictions could increase costs, change operations, or impede offering certain products in certain jurisdictions.
PagerDuty depends on key management and employees, including CEO Jennifer Tejada, and competition for software developers and sales personnel is intense, especially in Silicon Valley, Canada, and Portugal. Some key employees have fully vested equity awards that may reduce motivation, and immigration uncertainty around H1-B visas could impact recruiting and retention.
As of January 31, 2025, debt obligations totaled $450.7 million, of which $57.4 million was short-term. The conditional conversion feature of the convertible notes, if triggered, could require cash settlement or reclassification to current liabilities, and capped call counterparty risk could result in dilution or losses if an Option Counterparty defaults.
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
Customers with ARR > $100,000
Remaining Performance Obligations (RPO)
Summary, forecast, risks and KPIs are extracted from PagerDuty, Inc.'s SEC filings for Q4 FY2025 (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.