FALSE000156810000015681002024-11-262024-11-26

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________

FORM 8-K
_________________________

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 26, 2024  
_________________________

PAGERDUTY, INC.
(Exact name of registrant as specified in its charter)
_________________________

Delaware001-3885627-2793871
(State or Other Jurisdiction
of Incorporation)		(Commission File Number)(IRS Employer
Identification No.)
   
600 Townsend St., Suite 200
San Francisco, California
 94103
(Address of Principal Executive Offices) (Zip Code)

(844) 800-3889
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)  
_________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $0.000005 par value per sharePD
New York Stock Exchange (NYSE)
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨


Item 2.02    Results of Operations and Financial Condition

On November 26, 2024, PagerDuty, Inc. (the "Company") reported financial results for the quarter ended October 31, 2024. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference.

The press release is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information shall not be deemed incorporated by reference into any other filing with the Securities and Exchange Commission made by PagerDuty, Inc., whether made before or after today’s date, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific references in such filing.

Item 9.01    Financial Statements and Exhibits

(d)    Exhibits
Exhibit No. Description
99.1 
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 PagerDuty, Inc.
  
Date: November 26, 2024
By:/s/ Shelley Webb
 
Name:
Shelley Webb
 
Title:
Chief Legal & People Officer


pdlogoa14.jpg
PagerDuty Announces Third Quarter Fiscal 2025 Financial Results

Third quarter revenue increased 9% year over year to $119 million
Ending ARR grew 10% year over year to $483 million
Third quarter loss from operations was $10 million; non-GAAP operating income was $25 million

SAN FRANCISCO – (BUSINESS WIRE) – November 26, 2024 – PagerDuty, Inc. (NYSE:PD), a leader in digital operations management, today announced financial results for the third quarter of fiscal 2025, ended October 31, 2024.

“PagerDuty delivered a solid quarter with revenue and non-GAAP operating income results well above third quarter guidance ranges with annual recurring revenue increasing to $483 million, growing 10% year-over-year,” said Chairperson and CEO, Jennifer Tejada. “Consistent performance over the past four quarters has led to stabilization across all business segments, and along with improving leading indicators, positions the business on a strong upward trajectory.”

Third Quarter Fiscal 2025 Financial Highlights

•Revenue was $118.9 million, an increase of 9.4% year over year.
•Loss from operations was $10.3 million; operating margin was negative 8.7%.
•Non-GAAP operating income was $25.0 million; non-GAAP operating margin was 21.0%.
•Net loss per share attributable to PagerDuty, Inc. common stockholders was $0.07.
•Non-GAAP net income per diluted share attributable to PagerDuty, Inc. common stockholders was $0.25.
•Net cash provided by operating activities was $22.1 million, with free cash flow of $19.4 million.
•Cash, cash equivalents, and investments were $542.2 million as of October 31, 2024.

The section titled “Non-GAAP Financial Measures” below contains a description of the non-GAAP financial measures and reconciliations between GAAP and non-GAAP financial information.

Third Quarter and Recent Highlights

•Customers with annual recurring revenue over $100 thousand grew 6% to 825 as of October 31, 2024, compared to 778 a year ago.    
•Dollar-based net retention rate was 107% as of October 31, 2024, compared to 110% a year ago.
•Free and paid customers totaled more than 30,000 as of October 31, 2024, representing approximately 11% growth year over year.
•Total paid customers were 15,050 as of October 31, 2024, compared to 15,049 a year ago.
•Remaining performance obligations were $405 million as of October 31, 2024. Of this amount, the Company expects to recognize revenue of approximately $278 million, or 69%, over the next 12 months with the balance to be recognized as revenue thereafter.(1)
•Lands and expands include: Alphonso Inc,, CFP Energy Limited, Cloudflare, Infosys, NVIDIA Corporation, Waste Management Inc., and Zscaler.
•Announced Jennifer Tejada as guest speaker during the 2024 AWS re:Invent keynote.
•Introduced enterprise-grade, AI-powered innovations.
•Released Total Economic Impact Study revealing a 249% return on investment over three years using the PagerDuty Operations Cloud.
•Recognized as a Leader in 2024 GigaOm Radar for AIOps.
•Showcased PagerDuty customer - Anaplan.
•Recognized by Fortune's Best Workplaces as one of the top 25 companies for women in their small and medium designation.

(1)Beginning in the first quarter of fiscal 2025, the Company began to include contracts with an original term of less than 12 months in this disclosure which comprised $116 million of remaining non-cancelable performance obligations as of October 31, 2024.

1

Financial Outlook

For the fourth quarter of fiscal 2025, PagerDuty currently expects:

•Total revenue of $118.5 million - $120.5 million, representing a growth rate of 7% - 8% year over year.
•Non-GAAP net income per diluted share attributable to PagerDuty, Inc. common stockholders of $0.15 - $0.16 assuming approximately 93 million diluted shares and a non-GAAP tax rate of 23%.

For the full fiscal year 2025, PagerDuty currently expects:

•Total revenue of $464.5 million - $466.5 million (compared to the previous guidance of $463.0 million - $467.0 million), representing a growth rate of 8% year over year.
•Non-GAAP net income per diluted share attributable to PagerDuty, Inc. common stockholders of $0.78 - $0.79 (up from $0.67 - $0.72) assuming approximately 95 million diluted shares and a non-GAAP tax rate of 23%.

These statements are forward-looking and actual results may differ materially. Please refer to the section titled "Forward-Looking Statements" below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

PagerDuty has not reconciled forward-looking net loss per share attributable to PagerDuty, Inc. common stock holders to forward-looking non-GAAP net income per share attributable to PagerDuty, Inc. common stockholders because certain items are out of PagerDuty's control or cannot be reasonably predicted. Accordingly, such reconciliation is not available without unreasonable effort.

Conference Call Information

PagerDuty will host a conference call and live webcast (Zoom meeting ID 975 4160 6140) for analysts and investors at 2:00 p.m. Pacific Time on November 26, 2024. For audio only, the dial-in number 1-312-626-6799 may be used. This news release with the financial results will be accessible from PagerDuty’s website at investor.pagerduty.com prior to the conference call. A live webcast of the conference call will be accessible from the PagerDuty investor relations website at investor.pagerduty.com.

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 monitor PagerDuty’s investor relations website in addition to following PagerDuty’s press releases, SEC filings, social media, including PagerDuty’s LinkedIn account (https://www.linkedin.com/company/482819), X (formerly Twitter) account @pagerduty, the X account @jenntejada and Facebook page (facebook.com/pagerduty), and public conference calls and webcasts.
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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 future financial performance and outlook, and market positioning. Words such as “expect,” “extend,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “accelerate,” “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 and other factors detailed in our Annual Report on Form 10-K/A filed with the Securities and Exchange Commission (SEC) on March 18, 2024. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended October 31, 2024 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: the effect of unfavorable conditions in our industry or the global economy, or reductions in information technology spending on our business and results of operations; 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 global 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, Inc.

PagerDuty, Inc. (NYSE:PD) is a global leader in digital operations management, enabling customers to achieve operational efficiency at scale with the PagerDuty Operations Cloud. The PagerDuty Operations Cloud combines AIOps, Automation, Customer Service Operations and Incident Management with a powerful generative AI assistant to create a flexible, resilient and scalable platform to increase innovation velocity, grow revenue, reduce cost, and mitigate the risk of operational failure. Half of the Fortune 500 and nearly 70% of the Fortune 100 rely on PagerDuty as essential infrastructure for the modern enterprise. To learn more and try PagerDuty for free, visit www.pagerduty.com.

The PagerDuty Operations Cloud

The PagerDuty Operations Cloud is the platform for mission-critical, time-critical operations work in the modern enterprise. Through the power of AI and automation, it detects and diagnoses disruptive events, mobilizes the right team members to respond, and streamlines infrastructure and workflows across your digital operations. The Operations Cloud is essential infrastructure for revolutionizing digital operations to compete and win as a modern digital business.

Investor Relations Contact:
Tony Righetti
investor@pagerduty.com

Media Contact:
Debbie O'Brien
media@pagerduty.com

SOURCE PagerDuty
Source: PagerDuty, Inc.
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PAGERDUTY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

Three months ended October 31,Nine months ended October 31,
2024202320242023
Revenue$118,946 $108,720 $346,053 $319,582 
Cost of revenue(1)
20,268 19,705 59,691 57,474 
Gross profit98,678 89,015 286,362 262,108 
Operating expenses:
Research and development(1)
34,267 34,272 106,878 104,221 
Sales and marketing(1)
49,272 49,630 148,737 143,155 
General and administrative(1)
25,432 25,955 78,800 77,547 
Total operating expenses108,971 109,857 334,415 324,923 
Loss from operations(10,293)(20,842)(48,053)(62,815)
Interest income(2)
6,912 6,029 21,408 15,242 
Interest expense(2,377)(1,454)(6,888)(4,184)
Gain on partial extinguishment of convertible senior notes— 3,970 — 3,970 
Other income (expense), net(2)
346 (834)212 (960)
Loss before (provision for) benefit from income taxes(5,412)(13,131)(33,321)(48,747)
(Provision for) benefit from income taxes(715)41 (1,335)197 
Net loss$(6,127)$(13,090)$(34,656)$(48,550)
Net loss attributable to redeemable non-controlling interest(203)(324)(681)(1,513)
Net loss attributable to PagerDuty, Inc.$(5,924)$(12,766)$(33,975)$(47,037)
Less: Adjustment attributable to redeemable non-controlling interest634 2,359 9,881 4,088 
Net loss attributable to PagerDuty, Inc. common stockholders$(6,558)$(15,125)$(43,856)$(51,125)
Weighted average shares used in calculating net loss per share, basic and diluted91,438 93,104 92,530 92,257 
Net loss per share, basic and diluted, attributable to PagerDuty, Inc. common stockholders$(0.07)$(0.16)$(0.47)$(0.55)

(1) Includes stock-based compensation expense as follows:
Three months ended October 31,Nine months ended October 31,
2024202320242023
Cost of revenue$1,432 $1,820 $4,696 $5,860 
Research and development11,576 11,128 34,640 34,002 
Sales and marketing7,639 8,094 23,702 22,362 
General and administrative11,126 10,786 34,041 32,686 
Total$31,773 $31,828 $97,079 $94,910 

(2) Includes a reclassification for the three and nine months ended October 31, 2023 for a portion of other income to the interest income line item to conform to current period presentation.
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PAGERDUTY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)

October 31, 2024January 31, 2024
Assets
Current assets:
Cash and cash equivalents$326,440 $363,011 
Investments215,722 208,178 
Accounts receivable, net of allowance for credit losses of $803 and $1,382 as of October 31, 2024 and January 31, 2024, respectively
75,182 100,413 
Deferred contract costs, current19,632 19,502 
Prepaid expenses and other current assets17,157 12,094 
Total current assets654,133 703,198 
Property and equipment, net19,573 17,632 
Deferred contract costs, non-current24,167 25,118 
Lease right-of-use assets2,436 3,789 
Goodwill137,401 137,401 
Intangible assets, net23,698 32,616 
Other assets5,346 5,552 
Total assets$866,754 $925,306 
Liabilities, redeemable non-controlling interest, and stockholders’ equity
Current liabilities:
Accounts payable$7,116 $6,242 
Accrued expenses and other current liabilities15,801 15,472 
Accrued compensation34,474 30,239 
Deferred revenue, current214,058 223,522 
Lease liabilities, current3,550 6,180 
Convertible senior notes, net, current57,332 — 
Total current liabilities332,331 281,655 
Convertible senior notes, net, non-current392,697 448,030 
Deferred revenue, non-current2,659 4,639 
Lease liabilities, non-current6,119 6,809 
Other liabilities4,859 5,280 
Total liabilities738,665 746,413 
Redeemable non-controlling interest16,493 7,293 
Stockholders' equity
Common stock— — 
Additional paid-in capital699,633 774,768 
Accumulated other comprehensive loss(502)(733)
Accumulated deficit(586,410)(552,435)
Treasury stock(1,125)(50,000)
Total stockholders’ equity111,596 171,600 
Total liabilities, redeemable non-controlling interest, and stockholders' equity$866,754 $925,306 

5

PAGERDUTY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three months ended October 31,Nine months ended October 31,
2024202320242023
Cash flows from operating activities:
Net loss attributable to PagerDuty, Inc. common stockholders$(6,558)$(15,125)$(43,856)$(51,125)
Net loss and adjustment attributable to redeemable non-controlling interest431 2,035 9,200 2,575 
Net loss(6,127)(13,090)(34,656)(48,550)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization5,071 5,025 15,526 15,016 
Amortization of deferred contract costs5,555 5,123 16,261 15,286 
Amortization of debt issuance costs671 523 1,950 1,456 
Gain on extinguishment of convertible senior notes— (3,970)— (3,970)
Stock-based compensation31,773 31,828 97,079 94,910 
Non-cash lease expense903 1,106 2,538 3,425 
Other(1,387)(1,524)(3,852)(1,426)
Changes in operating assets and liabilities:
Accounts receivable(8,406)(5,420)24,751 18,983 
Deferred contract costs(5,311)(5,520)(15,441)(12,285)
Prepaid expenses and other assets(2,217)(1,289)(5,079)(2,674)
Accounts payable(176)(757)603 (1,002)
Accrued expenses and other liabilities(473)781 (1,302)767 
Accrued compensation4,823 5,706 4,002 (13,086)
Deferred revenue(1,070)(119)(11,386)(12,547)
Lease liabilities(1,556)(1,486)(4,505)(4,484)
Net cash provided by operating activities22,073 16,917 86,489 49,819 
Cash flows from investing activities:
Purchases of property and equipment(552)(245)(1,646)(1,193)
Capitalized internal-use software costs(2,078)(1,441)(5,019)(3,812)
Purchases of available-for-sale investments(54,721)(43,927)(153,121)(151,984)
Proceeds from maturities of available-for-sale investments54,250 56,500 147,827 164,064 
Proceeds from sales of available-for-sale investments— — 2,237 — 
Purchases of non-marketable equity investments— — — (200)
Net cash (used in) provided by investing activities(3,101)10,887 (9,722)6,875 
Cash flows from financing activities:
Proceeds from issuance of convertible senior notes, net of issuance costs— 391,543 (403)391,543 
Purchases of capped calls related to convertible senior notes— (55,102)— (55,102)
Repurchases of convertible senior notes— (223,471)— (223,471)
Investment from redeemable non-controlling interest holder— — — 1,781 
Repurchases of common stock(70,310)(50,000)(97,523)(50,000)
Proceeds from employee stock purchase plan— — 5,735 6,292 
Proceeds from issuance of common stock upon exercise of stock options723 973 1,527 8,390 
Employee payroll taxes paid related to net share settlement of restricted stock units(8,531)(9,786)(22,659)(25,772)
Net cash (used in) provided by financing activities(78,118)54,157 (113,323)53,661 
Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash(86)(177)(109)(451)
Net change in cash, cash equivalents, and restricted cash(59,232)81,784 (36,665)109,904 
Cash, cash equivalents, and restricted cash at beginning of period389,234 302,139 366,667 274,019 
Cash, cash equivalents, and restricted cash at end of period$330,002 $383,923 $330,002 $383,923 
6

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 research and development, non-GAAP sales and marketing, non-GAAP general and administrative, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income attributable to PagerDuty, Inc. common stockholders, non-GAAP net income per share attributable to PagerDuty, Inc. common stockholders, free cash flow, and free cash flow margin.

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, 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.

Specifically, PagerDuty excludes the following from its historical and prospective non-GAAP financial measures, as applicable:

Stock-based compensation: PagerDuty utilizes stock-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of its stockholders and at long-term retention, rather than to address operational performance for any particular period. As a result, stock-based compensation expenses vary for reasons that are generally unrelated to financial and operational performance in any particular period.

Employer taxes related to employee stock transactions: PagerDuty views the amount of employer taxes related to its employee stock transactions as an expense that is dependent on its stock price, employee exercise and other award disposition activity, and other factors that are beyond PagerDuty’s control. As a result, employer taxes related to employee stock transactions vary for reasons that are generally unrelated to financial and operational performance in any particular period.

Amortization of acquired intangible assets: PagerDuty views amortization of acquired intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of purchased intangibles is an expense that is not typically affected by operations during any particular period.

Acquisition-related expenses: PagerDuty views acquisition-related expenses, such as transaction costs, acquisition-related retention payments, and acquisition-related asset impairment, as events that are not necessarily reflective of operational performance during a period. In particular, PagerDuty believes the consideration of measures that exclude such expenses can assist in the comparison of operational performance in different periods which may or may not include such expenses.

Amortization of debt issuance costs: The imputed interest rates of the Company's convertible senior notes (the "2025 Notes" and the "2028 Notes" or, collectively, the "Notes") was approximately 1.91% for the 2025 Notes and 2.13% for the 2028 Notes. This is a result of the debt issuance costs, which reduce the carrying value of the convertible debt instruments. The debt issuance costs are amortized as interest expense. The expense for the amortization of the debt issuance costs is a non-cash item, and we believe the exclusion of this interest expense will provide for a more useful comparison of our operational performance in different periods.

7

Restructuring costs: PagerDuty views restructuring costs, such as employee severance-related costs and real estate impairment costs, as events that are not necessarily reflective of operational performance during a period. In particular, PagerDuty believes the consideration of measures that exclude such expenses can assist in the comparison of operational performance in different periods which may or may not include such expenses.

Gains (or losses) on partial extinguishment of convertible senior notes: PagerDuty views gains (or losses) on partial extinguishment of debt as events that are not necessarily reflective of operational performance during a period. PagerDuty believes that the consideration of measures that exclude such gain (or loss) impact can assist in the comparison of operational performance in different periods which may or may not include such gains (or losses).

Adjustment attributable to redeemable non-controlling interest: PagerDuty adjusts the value of redeemable non-controlling interest of its joint venture PagerDuty K.K. according to the operating agreement. PagerDuty believes this adjustment is not reflective of operational performance during a period and exclusion of such adjustments can assist in comparison of operational performance in different periods.

Income tax effects and adjustments: Based on PagerDuty's financial outlook for fiscal 2025, PagerDuty is utilizing a projected non-GAAP tax rate of 23% in order to provide better consistency across the interim reporting periods by eliminating the impact of non-recurring and period specific items, which can vary in size and frequency. PagerDuty's estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that PagerDuty believes materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses and other significant events.

Non-GAAP gross profit and non-GAAP gross margin

We define non-GAAP gross profit as gross profit excluding the following expenses typically included in cost of revenue: stock-based compensation expense, employer taxes related to employee stock transactions, amortization of acquired intangible assets, and restructuring costs. We define non-GAAP gross margin as non-GAAP gross profit as a percentage of revenue.

Non-GAAP operating expenses

We define non-GAAP operating expenses as operating expenses excluding stock-based compensation expense, employer taxes related to employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses, which include transaction costs, acquisition-related retention payments, and asset impairment, and restructuring costs which are not necessarily reflective of operational performance during a given period.

Non-GAAP operating income and non-GAAP operating margin

We define non-GAAP operating income as loss from operations excluding stock-based compensation expense, employer taxes related to employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses, which include transaction costs, acquisition-related retention payments, and asset impairment, and restructuring costs which are not necessarily reflective of operational performance during a given period. We define non-GAAP operating margin as non-GAAP operating income as a percentage of revenue.

Non-GAAP net income attributable to PagerDuty, Inc. common stockholders

We define non-GAAP net income attributable to PagerDuty, Inc. common stockholders as net loss attributable to PagerDuty, Inc. common stockholders excluding stock-based compensation expense, employer taxes related to employee stock transactions, amortization of debt issuance costs, amortization of acquired intangible assets, acquisition-related expenses, which include transaction costs, acquisition-related retention payments and asset impairment, restructuring costs, adjustment attributable to redeemable non-controlling interest, and income tax adjustments, which are not necessarily reflective of operational performance during a given period.
8


Non-GAAP net income per share, basic and diluted

We define non-GAAP net income per share, basic as non-GAAP net income attributable to PagerDuty, Inc. common stockholders divided by weighted average shares outstanding at the end of the reporting period. We define non-GAAP net income per share, diluted as non-GAAP net income attributable to PagerDuty, Inc. common stockholders divided by weighted average diluted shares outstanding at the end of the reporting period.

Free cash flow and free cash flow margin

We define free cash flow as net cash provided by operating activities, less cash used for purchases of property and equipment and capitalization of internal-use software costs. We define free cash flow margin as free cash flow as a percentage of revenue. In addition to the reasons stated above, we believe that free cash flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash in excess of our capital investments in property and equipment in order to enhance the strength of our balance sheet and further invest in our business and potential strategic initiatives. A limitation of the utility of free cash flow as a measure of our liquidity is that it does not represent the total increase or decrease in our cash balance for the period. We use free cash flow in conjunction with traditional U.S. GAAP measures as part of our overall assessment of our liquidity, including the preparation of our annual operating budget and quarterly forecasts and to evaluate the effectiveness of our business strategies. There are a number of limitations related to the use of free cash flow as compared to net cash provided by 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 non-GAAP financial measures to their most-comparable GAAP financial measures.

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PAGERDUTY, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except percentages and per share data)
(unaudited)

Three months ended October 31,Nine months ended October 31,
2024202320242023
Non-GAAP gross profit and non-GAAP gross margin
Gross profit$98,678 $89,015 $286,362 $262,108 
Add:
Stock-based compensation 1,432 1,820 4,696 5,860 
Employer taxes related to employee stock transactions 29 21 112 138 
Amortization of acquired intangible assets 2,200 2,087 6,875 6,260 
Restructuring costs — — (2)137 
Non-GAAP gross profit$102,339 $92,943 $298,043 $274,503 
Revenue
$118,946 $108,720 $346,053 $319,582 
Gross Margin
83.0 %81.9 %82.8 %82.0 %
Non-GAAP gross margin86.0 %85.5 %86.1 %85.9 %
Non-GAAP operating expenses
Research and development$34,267 $34,272 $106,878 $104,221 
Less:
Stock-based compensation11,576 11,128 34,640 34,002 
Employer taxes related to employee stock transactions173 210 691 930 
Acquisition-related expenses227 161 750 484 
Amortization of acquired intangible assets— 88 116 262 
Restructuring costs— — (2)(5)
Non-GAAP research and development$22,291 $22,685 $70,683 $68,548 
Sales and marketing$49,272 $49,630 $148,737 $143,155 
Less:
Stock-based compensation7,639 8,094 23,702 22,362 
Employer taxes related to employee stock transactions128 39 463 589 
Amortization of acquired intangible assets632 610 1,897 1,830 
Restructuring costs— (1)(10)(49)
Non-GAAP sales and marketing$40,873 $40,888 $122,685 $118,423 
General and administrative$25,432 $25,955 $78,800 $77,547 
Less:
Stock-based compensation11,126 10,786 34,041 32,686 
Employer taxes related to employee stock transactions122 145 463 658 
Acquisition-related expenses— 530 (1)530 
Amortization of acquired intangible assets— 21 29 65 
Restructuring costs— 133 24 1,451 
Non-GAAP general and administrative$14,184 $14,340 $44,244 $42,157 

Note: Certain figures may not sum due to rounding.









10

PAGERDUTY, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued)
(in thousands, except percentages and per share data)
(unaudited)

Three months ended October 31,Nine months ended October 31,
2024202320242023
Non-GAAP operating income and non-GAAP operating margin
Loss from operations$(10,293)$(20,842)$(48,053)$(62,815)
Add:
Stock-based compensation31,773 31,828 97,079 94,910 
Employer taxes related to employee stock transactions452 415 1,729 2,315 
Amortization of acquired intangible assets2,832 2,806 8,917 8,417 
Acquisition-related expenses227 691 749 1,014 
Restructuring costs— 132 10 1,534 
Non-GAAP operating income$24,991 $15,030 $60,431 $45,375 
Revenue$118,946 $108,720 $346,053 $319,582 
Operating margin(8.7)%(19.2)%(13.9)%(19.7)%
Non-GAAP operating margin21.0 %13.8 %17.5 %14.2 %
Non-GAAP net income attributable to PagerDuty, Inc. common stockholders
Net loss attributable to PagerDuty, Inc. common stockholders$(6,558)$(15,125)$(43,856)$(51,125)
Add:
Stock-based compensation31,773 31,828 97,079 94,910 
Employer taxes related to employee stock transactions452 415 1,729 2,315 
Amortization of debt issuance costs671 523 1,950 1,456 
Amortization of acquired intangible assets2,832 2,806 8,917 8,417 
Acquisition-related expenses227 691 749 1,014 
Restructuring costs— 132 10 1,534 
Gain on extinguishment of convertible senior notes— (3,970)— (3,970)
Adjustment attributable to redeemable non-controlling interest634 2,359 9,881 4,088 
Income tax effects and adjustments(6,310)(466)(16,402)(1,920)
Non-GAAP net income attributable to PagerDuty, Inc. common stockholders$23,721 $19,193 $60,057 $56,719 
Non-GAAP net income per share, basic
Net loss per share, basic, attributable to PagerDuty, Inc. common stockholders$(0.07)$(0.16)$(0.47)$(0.55)
Non-GAAP adjustments to net loss attributable to PagerDuty, Inc. common stockholders0.33 0.37 1.12 1.16 
Non-GAAP net income per share, basic, attributable to PagerDuty, Inc. common stockholders$0.26 $0.21 $0.65 $0.61 
Non-GAAP net income per share, diluted(1)
Net loss per share, diluted, attributable to PagerDuty, Inc. common stockholders$(0.07)$(0.16)$(0.47)$(0.55)
Non-GAAP adjustments to net loss attributable to PagerDuty, Inc. common stockholders0.32 0.36 1.10 1.13 
Non-GAAP net income per share, diluted, attributable to PagerDuty, Inc. common stockholders$0.25 $0.20 $0.63 $0.58 
Weighted-average shares used in calculating net loss per share, basic and diluted91,438 93,104 92,530 92,257 
Weighted-average shares used in calculating non-GAAP net income per share
Basic91,438 93,104 92,530 92,257 
Diluted94,036 96,235 95,549 100,834 
Note: Certain figures may not sum due to rounding.

(1) On October 13, 2023, the Company provided written notice to the trustee and the note holders of the 2025 Notes that it had irrevocably elected to settle the principal amount of its convertible senior notes in cash and pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election, in respect to the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the 2025 Notes being converted. The company uses the if-converted method to calculate the non-GAAP net income per diluted share attributable to PagerDuty, Inc. related to the convertible notes due 2025 prior to the election on October 13, 2023. As such, approximately 5.8 million and 6.7 million shares related to the convertible notes due 2025 were included in the non-GAAP diluted outstanding share number for the three and nine months ended October 31, 2023, respectively, related to the period prior to the election on October 13, 2023. Similarly, for the three and nine months ended October 31, 2023, the numerator used to compute this measure was increased by $0.7 million and $2.5 million, respectively, for after-tax interest expense savings related to our convertible notes.
11

PAGERDUTY, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued)
(in thousands, except percentages)
(unaudited)

Three months ended October 31,Nine months ended October 31,
2024202320242023
Free cash flow and free cash flow margin
Net cash provided by investing activities$22,073 $16,917 $86,489 $49,819 
Purchases of property and equipment(552)(245)(1,646)(1,193)
Capitalization of internal-use software costs(2,078)(1,441)(5,019)(3,812)
Free cash flow$19,443 $15,231 $79,824 $44,814 
Net cash (used in) provided by investing activities$(3,101)$10,887 $(9,722)$6,875 
Net cash (used in) provided by financing activities$(78,118)$54,157 $(113,323)$53,661 
Revenue$118,946 $108,720 $346,053 $319,582 
Free cash flow margin16.3 %14.0 %23.1 %14.0 %

12
v3.24.3
Cover
Nov. 26, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Nov. 26, 2024
Entity Registrant Name PAGERDUTY, INC.
Entity Incorporation, State or Country Code DE
Entity File Number 001-38856
Entity Tax Identification Number 27-2793871
Entity Address, Address Line One 600 Townsend St.
Entity Address, Address Line Two Suite 200
Entity Address, City or Town San Francisco
Entity Address, State or Province CA
Entity Address, Postal Zip Code 94103
City Area Code 844
Local Phone Number 800-3889
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $0.000005 par value per share
Trading Symbol PD
Security Exchange Name NYSE
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0001568100
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