Digital operations platform PagerDuty (NYSE: PD) announced better-than-expected revenue in Q4 CY2025, with sales up 2.7% year on year to $124.8 million. On the other hand, next quarter’s revenue guidance of $119 million was less impressive, coming in 3.9% below analysts’ estimates. Its non-GAAP profit of $0.29 per share was 16.5% above analysts’ consensus estimates.
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PagerDuty (PD) Q4 CY2025 Highlights:
- Revenue: $124.8 million vs analyst estimates of $123.2 million (2.7% year-on-year growth, 1.3% beat)
- Adjusted EPS: $0.29 vs analyst estimates of $0.25 (16.5% beat)
- Adjusted Operating Income: $29.83 million vs analyst estimates of $25.52 million (23.9% margin, 16.8% beat)
- Revenue Guidance for Q1 CY2026 is $119 million at the midpoint, below analyst estimates of $123.8 million
- Adjusted EPS guidance for the upcoming financial year 2027 is $1.26 at the midpoint, beating analyst estimates by 5.1%
- Operating Margin: 3.6%, up from -9.6% in the same quarter last year
- Free Cash Flow Margin: 18.1%, up from 16.8% in the previous quarter
- Customers: 15,351, down from 15,398 in the previous quarter
- Billings: $150.7 million at quarter end, in line with the same quarter last year
- Market Capitalization: $674.5 million
“Fiscal 2026 was a transformational year for PagerDuty, marked by stabilized revenue retention, a top-end guidance beat with $493 million in revenue, and a 700-basis-point expansion in non-GAAP operating margin,” said Jennifer Tejada, Chairperson and CEO of PagerDuty.
Company Overview
Born from the frustration of developers being woken up by unprioritized alerts, PagerDuty (NYSE: PD) is a digital operations management platform that helps organizations detect and respond to IT incidents, outages, and other critical issues in real-time.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, PagerDuty’s sales grew at a decent 18.2% compounded annual growth rate over the last five years. Its growth was slightly above the average software company and shows its offerings resonate with customers.
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. PagerDuty’s recent performance shows its demand has slowed as its annualized revenue growth of 6.9% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
This quarter, PagerDuty reported modest year-on-year revenue growth of 2.7% but beat Wall Street’s estimates by 1.3%. Company management is currently guiding for flat sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 3.5% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will face some demand challenges.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
PagerDuty’s billings came in at $150.7 million in Q4, and over the last four quarters, its growth was underwhelming as it averaged 2.5% year-on-year increases. This alternate topline metric grew slower than total sales, meaning the company recognizes revenue faster than it collects cash - a headwind for its liquidity that could also signal a slowdown in future revenue growth. 
Customer Base
PagerDuty reported 15,351 customers at the end of the quarter, a sequential decrease of 47. That’s worse than what we’ve observed previously, and we’ve no doubt shareholders would like to see the company accelerate its sales momentum.
Key Takeaways from PagerDuty’s Q4 Results
We were impressed by PagerDuty’s optimistic full-year EPS guidance, which blew past analysts’ expectations. We were also happy its billings narrowly outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next year suggests a significant slowdown in demand and its full-year revenue guidance fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 14.9% to $6.24 immediately following the results.
PagerDuty underperformed this quarter, but does that create an opportunity to invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
