Revenue increased 37% year-over-year to a
record $42.8 million
Over 12,000 customers now using PagerDuty to
power their digital transformations
Announced Dave Justice will join the company as
CRO to drive future revenue growth
PagerDuty, Inc. (NYSE:PD), a global leader in digital operations
management, today announced financial results for the third quarter
of fiscal year 2020 ended October 31, 2019.
“We are pleased to report third quarter results, demonstrating
our leadership in the rapidly growing category we pioneered,
Digital Operations Management," said Jennifer Tejada, Chief
Executive Officer of PagerDuty. “With strong customer growth at 15%
year over year and growth in accounts over $100k ARR at 49%, we are
excited to bring PagerDuty to more customers than ever before. We
are also seeing growth in our Digital Operations plan with it
accounting for 45% of our net-new ARR.”
Third Quarter Fiscal 2020 Financial Highlights
- Revenue: Total revenue was $42.8 million, up 37%
year-over-year.
- Gross Margin: GAAP gross margin was 84.5%. Non-GAAP
gross margin was 85.2% compared to Non-GAAP gross margin of 85.5%
in the third quarter of fiscal 2019.
- Operating Loss: GAAP operating loss was $16.7 million,
or GAAP operating margin of negative 39.0% , compared to a $16.0
million loss, or GAAP operating margin of negative 51.1% , in the
third quarter of fiscal 2019. Non-GAAP operating loss was $9.3
million, or non-GAAP operating margin of negative 21.9%, compared
to a $5.8 million loss, or non-GAAP operating margin of negative
18.5%, in the third quarter of fiscal 2019.
- Net Loss: GAAP net loss was $15.3 million, compared to
$15.4 million in the third quarter of fiscal 2019. GAAP net loss
per share was $0.20, compared to $0.71 in the third quarter of
fiscal 2019. Non-GAAP net loss was $7.9 million, compared to $5.2
million in the third quarter of fiscal 2019. Non-GAAP net loss per
share was $0.10, compared to $0.24 in the third quarter of fiscal
2019.
- Cash Flow: Net cash provided by operations was $3.4
million, or 8.0% of revenue, compared to net cash provided by
operations of $2.8 million, or 9.0% of revenue, in the third
quarter of fiscal 2019. Free cash flow was positive $2.3 million,
or 5.3% of revenue, compared to positive $0.2 million, or 0.5% of
revenue, in the third quarter of fiscal 2019.
- Cash and Cash Equivalents and Investments were $346.1
million as of October 31, 2019.
The section titled “Non-GAAP Financial Measures” below contains
a description of the non-GAAP financial measures and
reconciliations between historical GAAP and non-GAAP
information.
Recent Highlights
- Customer Growth: PagerDuty had over 12,000 customers as
of October 31, 2019. New and expansion customers include Gap,
Carnival Cruises and Sumo Logic.
- Product Innovation: PagerDuty announced two new
capabilities: Intelligent Triage and Intelligent Dashboards.
Intelligent Triage is a new feature set within PagerDuty’s Event
Intelligence product, which uses machine learning to group alerts
together so teams don’t receive multiple alerts coming from related
issues. Intelligent Dashboards is new to PagerDuty’s Analytics
product and leverages machine learning to provide teams with
recommendations for how to resolve issues, as well as benchmarks
against performance metrics from other teams in their organization
or vertical industry so they can continually improve.
- Platform Expansion: We announced PagerDuty for Customer
Service to empower front-line customer service agents to solve
issues faster and deliver better experiences to their customers.
This solution consists of new partnerships and two-way integrations
with both Zendesk and Salesforce Service Cloud. It allows teams to
proactively share information between the applications they work
in, understand and resolve technical issues and work together as a
united front supporting customers.
Financial Outlook
For the fourth quarter of fiscal 2020, PagerDuty currently
expects:
- Total revenue of $44.5 million - $45.5 million, representing a
growth rate of 32% - 34% year-over-year
- Non-GAAP net loss per share of $0.06 - $0.07, assuming
approximately 77 million shares
For the full fiscal year 2020, PagerDuty currently
expects:
- Total revenue of $165 million - $166 million, representing a
growth rate of 40% - 41% year-over-year
- Non-GAAP net loss per share of $0.38 - $0.39, assuming
approximately 65 million shares
These statements are forward-looking and actual results may
differ materially. Please refer to the Forward-Looking Statements
safe harbor below for information on the factors that could cause
our actual results to differ materially from these forward-looking
statements.
PagerDuty has not reconciled its expectations as to non-GAAP net
loss per share to GAAP net loss per share because certain items are
out of its control or cannot be reasonably predicted. Accordingly,
a reconciliation for forward-looking non-GAAP net loss per share is
not available without unreasonable effort.
Conference Call Information:
PagerDuty will host a conference call and live webcast for
analysts and investors at 2:00 p.m. Pacific Time on December 5,
2019. This news release with the financial results will be
accessible from PagerDuty’s website at investor.pagerduty.com prior
to the conference call. Interested parties can access the call by
dialing (833) 227-5837 or (647) 689-4067 for callers outside North
America, and using the conference ID 2091657.
A live webcast of the conference call will be accessible from
the PagerDuty investor relations website at investor.pagerduty.com.
A telephonic replay of the conference call will be available
through December 19, 2019 and may be accessed by dialing (800)
585-8367 or (416) 621-4642 for callers outside North America, and
using the conference ID: 2091657.
Supplemental Financial and Other Information:
Supplemental financial and other information can be accessed
through PagerDuty’s investor relations website at
investor.pagerduty.com. PagerDuty uses the investor relations
section on its website as the means of complying with its
disclosure obligations under Regulation FD. Accordingly, we
recommend that investors should monitor PagerDuty’s investor
relations website in addition to following PagerDuty’s press
releases, SEC filings, social media, including PagerDuty’s Twitter
account (twitter.com/pagerduty), the Twitter account @jenntejada
and Facebook page (facebook.com/pagerduty), and public conference
calls and webcasts.
Non-GAAP Financial Measures:
This press release and the accompanying tables contain the
following non-GAAP financial measures: non-GAAP gross profit,
non-GAAP gross margin, non-GAAP operating loss, non-GAAP operating
margin, non-GAAP net loss, non-GAAP net loss per share, and free
cash flow.
PagerDuty believes that non-GAAP financial measures, when taken
collectively, may be helpful to investors because they provide
consistency and comparability with past financial performance and
can assist in comparisons with other companies, some of which use
similar non-GAAP financial measures to supplement their GAAP
results. The non-GAAP financial information is presented for
supplemental informational purposes only, and should not be
considered a substitute for financial information presented in
accordance with GAAP, and may be different from similarly-titled
non-GAAP measures used by other companies.
The principal limitation of these non-GAAP financial measures is
that they exclude significant expenses and income that are required
by GAAP to be recorded in PagerDuty’s financial statements. In
addition, they are subject to inherent limitations as they reflect
the exercise of judgment by PagerDuty’s management about which
expenses and income are excluded or included in determining these
non-GAAP financial measures. A reconciliation is provided below for
each historical non-GAAP financial measure to the most directly
comparable financial measure presented in accordance with GAAP.
PagerDuty defines non-GAAP operating loss as GAAP loss from
operations excluding stock-based compensation expense and non-cash
charitable contribution expense. PagerDuty defines non-GAAP net
loss (which is used in calculating non-GAAP net loss per share) as
GAAP net loss excluding stock-based compensation expense and
non-cash charitable contribution expense. There are a number of
limitations related to the use of these non-GAAP measures as
compared to GAAP operating loss and net loss, including that the
non-GAAP measures exclude stock-based compensation expense, which
has been, and will continue to be for the foreseeable future, a
significant recurring expense in PagerDuty’s business and an
important part of its compensation strategy.
PagerDuty defines free cash flow as net cash provided by (used
in) operating activities, less cash used for purchases of property
and equipment and capitalized internal-use software. In addition to
the reasons stated above, PagerDuty believes that free cash flow is
useful to investors as a liquidity measure because it measures
PagerDuty’s ability to generate or use cash in excess of its
capital investments in property and equipment to enhance the
strength of its balance sheet and further invest in its business
and potential strategic initiatives. PagerDuty uses free cash flow
in conjunction with traditional GAAP measures as part of its
overall assessment of its liquidity, including the preparation of
PagerDuty’s annual operating budget and quarterly forecasts, to
evaluate the effectiveness of its business strategies, and to
assess its liquidity.
There are a number of limitations related to the use of free
cash flow as compared to net cash provided by (used in) operating
activities, including that free cash flow includes capital
expenditures, the benefits of which are realized in periods
subsequent to those when expenditures are made.
PagerDuty encourages investors to review the related GAAP
financial measures and the reconciliation of these non-GAAP
financial measures to their most directly comparable GAAP financial
measures, which it includes in press releases announcing quarterly
financial results, including this press release, and not to rely on
any single financial measure to evaluate PagerDuty’s business.
Please see the reconciliation tables at the end of this release
for the reconciliation of GAAP and non-GAAP results.
Forward-Looking Statements:
This press release contains “forward-looking statements” within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, including but not limited
to, statements regarding our GAAP and non-GAAP guidance for the
fourth fiscal quarter and full fiscal 2020 and financial outlook
and market positioning. Words such as “expect,” “anticipate,”
“should,” “believe,” “hope,” “target,” “project,” “goals,”
“estimate,” “potential,” “predict,” “may,” “will,” “might,”
“could,” “intend,” “shall” and variations of these terms or the
negative of these terms and similar expressions are intended to
identify these forward-looking statements. Forward-looking
statements are subject to a number of risks and uncertainties, many
of which involve factors or circumstances that are beyond our
control. Our actual results could differ materially from those
stated or implied in forward-looking statements due to a number of
factors, including but not limited to, risks detailed in our Form
10-Q filed with the Securities and Exchange Commission (SEC) on
September 6, 2019. Additional information will be made available in
our quarterly report on Form 10-Q for the quarter ended October 31,
2019 and other filings and reports that we may file from time to
time with the SEC. In particular, the following risks and
uncertainties, among others, could cause results to differ
materially from those expressed or implied by such forward-looking
statements: total revenue, non-GAAP net loss per share and shares
outstanding for the fourth quarter and full year of fiscal 2020,
our ability to achieve and maintain future profitability, our
ability to attract new customers and retain and sell additional
functionality and services to our existing customers, our ability
to sustain and manage our growth, our dependence on revenue from a
single product, our ability to compete effectively in an
increasingly competitive market, and general market, political,
economic, and business conditions.
Past performance is not necessarily indicative of future
results. The forward-looking statements included in this press
release represent our views as of the date of this press release.
We anticipate that subsequent events and developments will cause
our views to change. We undertake no intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. These
forward-looking statements should not be relied upon as
representing our views as of any date subsequent to the date of
this press release.
About PagerDuty
PagerDuty, Inc. (NYSE:PD) is a leader in digital operations
management. In an always-on world, organizations of all sizes trust
PagerDuty to help them deliver a perfect digital experience to
their customers, every time. Teams use PagerDuty to identify issues
and opportunities in real time and bring together the right people
to fix problems faster and prevent them in the future. Notable
customers including GE, Vodafone, Box, and American Eagle
Outfitters. To learn more and try PagerDuty for free, visit
www.pagerduty.com. Follow our blog and connect with us on Twitter,
LinkedIn, YouTube and Facebook.
PagerDuty, Inc.
Condensed Consolidated
Statements of Operations and Comprehensive Loss
(in thousands, except per share
data)
(unaudited)
Three Months Ended October
31,
Nine Months Ended October
31,
2019
2018
2019
2018
Revenue
$
42,750
$
31,229
$
120,425
$
83,993
Cost of revenue(1)
6,634
4,599
18,226
12,396
Gross profit
36,116
26,630
102,199
71,597
Operating expenses:
Research and development(1)
12,619
14,578
35,160
30,101
Sales and marketing(1)
27,425
18,738
72,378
47,351
General and administrative(1)
12,765
9,264
38,464
30,052
Total operating expenses
52,809
42,580
146,002
107,504
Loss from operations
(16,693
)
(15,950
)
(43,803
)
(35,907
)
Interest income
1,427
318
4,283
596
Other income, net
245
372
346
1,087
Loss before provision for income taxes
(15,021
)
(15,260
)
(39,174
)
(34,224
)
Provision for income taxes
(244
)
(115
)
(725
)
(310
)
Net loss
$
(15,265
)
$
(15,375
)
$
(39,899
)
$
(34,534
)
Comprehensive loss
Unrealized loss on investments
(50
)
—
(50
)
—
Total comprehensive loss
$
(15,315
)
$
(15,375
)
$
(39,949
)
$
(34,534
)
Net loss per share, basic and diluted
$
(0.20
)
$
(0.71
)
$
(0.65
)
$
(1.63
)
Weighted-average shares used in
calculating net loss per share, basic and diluted
75,992
21,598
61,628
21,226
(1) Includes stock-based compensation expense and non-cash
charitable contribution expense as follows (in thousands,
unaudited):
Three Months Ended October
31,
Nine Months Ended October
31,
2019
2018
2019
2018
Cost of revenue
$
303
$
71
$
773
$
202
Research and development
1,462
6,567
3,760
7,680
Sales and marketing
2,295
1,198
6,084
2,964
General and administrative
3,287
2,340
8,775
11,233
Total
$
7,347
$
10,176
$
19,392
$
22,079
PagerDuty, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
As of October 31,
As of January 31,
2019
2019
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
176,347
$
127,875
Accounts receivable, net of allowance for
doubtful accounts of $1,024 and $2,360 as of October 31, 2019 and
January 31, 2019, respectively
29,205
33,538
Investments, current
169,744
—
Deferred contract costs, current
8,251
6,002
Prepaid expenses and other current
assets
9,985
5,422
Total current assets
393,532
172,837
Property and equipment, net
10,031
5,772
Deferred contract costs, non-current
14,667
11,470
Other assets
1,767
7,155
Total assets
$
419,997
$
197,234
Liabilities, redeemable convertible
preferred stock and stockholders’ equity (deficit)
Current liabilities:
Accounts payable
$
5,254
$
7,657
Accrued expenses and other current
liabilities
6,827
7,145
Accrued compensation
15,669
10,050
Deferred revenue, current
78,582
63,957
Total current liabilities
106,332
88,809
Deferred revenue, non-current
2,042
147
Other liabilities
7,132
4,185
Total liabilities
115,506
93,141
Redeemable convertible preferred stock
—
173,023
Stockholders’ equity (deficit):
Common stock
—
—
Additional paid-in-capital
473,308
59,938
Accumulated other comprehensive loss
(50
)
—
Accumulated deficit
(168,767
)
(128,868
)
Total stockholders’ equity (deficit)
304,491
(68,930
)
Total liabilities, redeemable
convertible preferred stock and stockholders’ equity
(deficit)
$
419,997
$
197,234
PagerDuty, Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended October
31,
2019
2018
Cash flows from operating
activities
Net loss
(39,899
)
$
(34,534
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
1,675
1,254
Amortization of deferred contract
costs
5,499
3,055
Stock-based compensation
19,392
15,862
Warrant issued in conjunction with
charitable contribution
—
6,217
Other
(383
)
664
Changes in operating assets and
liabilities:
Accounts receivable
4,333
(6,245
)
Deferred contract costs
(10,945
)
(8,924
)
Prepaid expenses and other assets
(4,864
)
(2,448
)
Accounts payable
(1,386
)
319
Accrued expenses and other liabilities
2,464
2,127
Accrued compensation
5,619
2,840
Deferred revenue
16,520
13,577
Net cash used in operating
activities
(1,975
)
(6,236
)
Cash flows from investing
activities
Purchases of property and equipment
(3,190
)
(3,078
)
Capitalized internal-use software
costs
—
(224
)
Purchases of held-to-maturity
investments
(45,736
)
—
Proceeds from held-to-maturity of
investments
8,950
—
Purchases of available-for-sale
investments
(132,706
)
—
Net cash used in investing activities
(172,682
)
(3,302
)
Cash flows from financing
activities
Proceeds from issuance of redeemable
convertible preferred stock, net of issuance costs
—
89,819
Proceeds from initial public offering, net
of underwriters' discounts and commissions
220,086
—
Payments of costs related to initial
public offering
(5,603
)
—
Proceeds from repayment of promissory
note
515
—
Proceeds from issuance of common stock
upon exercise of stock options
5,750
1,305
Proceeds from early exercised stock
options, net of repurchases
—
2,234
Proceeds from issuance of common stock
upon exercise of warrant
—
473
Employee payroll taxes paid related to net
share settlement of restricted stock units
(14
)
—
Net cash provided by financing
activities
220,734
93,831
Net increase in cash, cash equivalents and
restricted cash
46,077
84,293
Cash, cash equivalents and restricted cash
at beginning of year
130,323
46,451
Cash, cash equivalents and restricted
cash at end of year
$
176,400
$
130,744
PagerDuty, Inc.
Reconciliation of GAAP to
Non-GAAP Data
(in thousands, except percentages
and per share data)
(unaudited)
Three Months Ended October 31,
2019
GAAP
Stock-based
Compensation
Non-GAAP
Cost of revenue
$
6,634
$
(303
)
$
6,331
Gross profit
36,116
303
36,419
Gross margin
84.5
%
0.7
%
85.2
%
Operating expenses:
Research and development
12,619
(1,462
)
11,157
Sales and marketing
27,425
(2,295
)
25,130
General and administrative
12,765
(3,287
)
9,478
Operating loss
(16,693
)
7,347
(9,346
)
Operating margin
(39.0
)%
17.2
%
(21.9
)%
Net loss
$
(15,265
)
$
7,347
$
(7,918
)
Net loss per share
$
(0.20
)
$
(0.10
)
Three Months Ended October 31,
2018
GAAP
Stock-based
Compensation
Non-GAAP
Cost of revenue
$
4,599
$
(71
)
$
4,528
Gross profit
26,630
71
26,701
Gross margin
85.3
%
0.2
%
85.5
%
Operating expenses:
Research and development
14,578
(6,567
)
8,011
Sales and marketing
18,738
(1,198
)
17,540
General and administrative
9,264
(2,340
)
6,924
Operating loss
(15,950
)
10,176
(5,774
)
Operating margin
(51.1
)%
32.6
%
(18.5
)%
Net loss
$
(15,375
)
$
10,176
$
(5,199
)
Net loss per share
$
(0.71
)
$
(0.24
)
PagerDuty, Inc.
Reconciliation of GAAP to
Non-GAAP Data
(in thousands, except percentages
and per share data)
(unaudited)
Nine Months Ended October 31,
2019
GAAP
Stock-based
Compensation
Non-GAAP
Cost of revenue
$
18,226
$
(773
)
$
17,453
Gross profit
102,199
773
102,972
Gross margin
84.9
%
0.6
%
85.5
%
Operating expenses:
Research and development
35,160
(3,760
)
31,400
Sales and marketing
72,378
(6,084
)
66,294
General and administrative
38,464
(8,775
)
29,689
Operating loss
(43,803
)
19,392
(24,411
)
Operating margin
(36.4
)%
16.1
%
(20.3
)%
Net loss
$
(39,899
)
$
19,392
$
(20,507
)
Net loss per share
$
(0.65
)
$
(0.33
)
Nine Months Ended October 31,
2018
GAAP
Stock-based
Compensation(1)
Non-GAAP
Cost of revenue
$
12,396
$
(202
)
$
12,194
Gross profit
71,597
202
71,799
Gross margin
85.2
%
0.2
%
85.5
%
Operating expenses:
Research and development
30,101
(7,680
)
22,421
Sales and marketing
47,351
(2,964
)
44,387
General and administrative
30,052
(11,233
)
18,819
Operating loss
(35,907
)
22,079
(13,828
)
Operating margin
(42.7
)%
26.3
%
(16.5
)%
Net loss
$
(34,534
)
$
22,079
$
(12,455
)
Net loss per share
$
(1.63
)
$
(0.59
)
(1) Stock-based compensation expense above includes $6.2 million
of non-cash charitable contribution expense. ______________ Note:
Certain figures in the tables above may not sum due to
rounding.
PagerDuty, Inc.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(in thousands, except percentages
and per share data)
(unaudited)
Free Cash Flow
Three Months Ended October
31,
Nine Months Ended October
31,
2019
2018
2019
2018
Net cash provided by (used in) operating
activities
$
3,432
$
2,811
$
(1,975
)
$
(6,236
)
Less:
Purchases of property and equipment
(1,171
)
(2,514
)
(3,190
)
(3,078
)
Capitalization of internal-use
software
—
(132
)
—
(224
)
Free cash flow
$
2,261
$
165
$
(5,165
)
$
(9,538
)
Net cash used in investing activities
(135,967
)
(2,646
)
(172,682
)
(3,302
)
Net cash provided by financing
activities
2,566
90,999
220,734
93,831
Free cash flow margin
5.3
%
0.5
%
(4.3
)%
(11.4
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191205005852/en/
Investor Relations Contact: Stacey Finerman
investor@pagerduty.com
Source: PagerDuty
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