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PagerDuty Announces Third Quarter Fiscal 2024 Financial Results

Third quarter revenue increased 15% year over year to $108.7 million

Third quarter GAAP operating loss of $20.8 million, non-GAAP operating income of $15.0 million

PagerDuty, Inc. (NYSE:PD), a leader in digital operations management, today announced financial results for the third quarter of fiscal 2024, ended October 31, 2023.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20231130934056/en/

PagerDuty Q3 FY24 Infographic (Graphic: PagerDuty)

PagerDuty Q3 FY24 Infographic (Graphic: PagerDuty)

“Results in the third quarter were above our guidance ranges with 15% revenue growth and a non-GAAP operating margin of 14%,” said Jennifer Tejada, Chairperson and CEO, PagerDuty. “Momentum and innovation within the PagerDuty Operations Cloud continued in the quarter with new AI enhancements and the acquisition of Jeli in November to address our customers’ biggest operational challenges.”

Third Quarter Fiscal 2024 Financial Highlights

  • Revenue was $108.7 million, an increase of 15.4% year over year.
  • GAAP operating loss was $20.8 million; GAAP operating margin of negative 19.2%.
  • Non-GAAP operating income was $15.0 million; non-GAAP operating margin of 13.8%.
  • GAAP net loss per share attributable to PagerDuty, Inc. common stockholders was $0.16; non-GAAP net income per diluted share attributable to PagerDuty, Inc. common stockholders was $0.20.
  • Operating cash flow was $16.9 million, with free cash flow of $15.2 million.
  • Cash, cash equivalents and current investments were $575.3 million as of October 31, 2023.

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.

Third Quarter and Recent Highlights

Financial Outlook

For the fourth quarter of fiscal 2024, PagerDuty currently expects:

  • Total revenue of $109.5 million - $111.5 million, representing a growth rate of 8% - 10% year over year
  • Non-GAAP net income per diluted share attributable to PagerDuty, Inc. common stockholders of $0.14 - $0.15 assuming approximately 95 million diluted shares

For the full fiscal year 2024, PagerDuty currently expects:

  • Total revenue of $429.0 million - $431.0 million, representing a growth rate of 16% year over year
  • Non-GAAP net income per diluted share attributable to PagerDuty, Inc. common stockholders of $0.72 - $0.73 assuming approximately 101 million diluted shares

These statements are forward-looking and actual results may differ materially. Please refer to the Forward-Looking Statements section 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 income (loss) per share attributable to PagerDuty, Inc. common stockholders to GAAP net loss per share attributable to PagerDuty, Inc. common stockholders because certain items are out of its control or cannot be reasonably predicted. Accordingly, a reconciliation for forward-looking non-GAAP net income (loss) per share attributable to PagerDuty, Inc. common stockholders 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 November 30, 2023. 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.

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 (loss), non-GAAP operating margin, non-GAAP net income (loss) attributable to PagerDuty, Inc. common stockholders, non-GAAP net income (loss) per share attributable to PagerDuty, Inc. common stockholders, 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, 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 Convertible Senior Notes (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.

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 Effect of Non-GAAP Adjustments: PagerDuty excludes the related income tax effect of the non-GAAP adjustments described above and eliminates the impact of non-recurring and period specific items, which can vary in size and frequency. In particular, PagerDuty believes the consideration of measures that exclude such impacts can assist in the comparison of operational performance in different periods, which may or may not include items such as acquisition related income tax benefits.

PagerDuty defines non-GAAP gross profit as gross profit adjusted for stock-based compensation expense, employer taxes related to employee stock transactions, amortization of acquired intangible assets, and restructuring costs. PagerDuty defines non-GAAP gross margin as non-GAAP gross profit as a percentage of revenue.

PagerDuty defines non-GAAP operating income (loss) as GAAP loss from operations excluding stock-based compensation expense, employer taxes related to employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses, and restructuring costs. PagerDuty defines non-GAAP net income (loss) attributable to PagerDuty, Inc. common stockholders (which is used in calculating non-GAAP net income (loss) per share attributable to PagerDuty, Inc. common stockholders) as GAAP 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 and acquisition-related retention payments, which are not necessarily reflective of operational performance during a given period, restructuring costs, adjustment attributable to redeemable non-controlling interest, and the associated tax impact of these items, where applicable. 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 capitalization of internal-use software costs. 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 in order 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 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 filed with the Securities and Exchange Commission (SEC) on March 16, 2023. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended October 31, 2023 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 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, Incident Management, and Customer Service Operations into a flexible, resilient and scalable platform to increase innovation velocity, grow revenue, reduce cost, and mitigate the risk of operational failure. More than 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.

PagerDuty, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

 

 

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenue

$

108,720

 

 

$

94,203

 

 

$

319,582

 

 

$

269,827

 

Cost of revenue(1)

 

19,705

 

 

 

18,007

 

 

 

57,474

 

 

 

52,090

 

Gross profit

 

89,015

 

 

 

76,196

 

 

 

262,108

 

 

 

217,737

 

Operating expenses:

 

 

 

 

 

 

 

Research and development(1)

 

34,272

 

 

 

35,004

 

 

 

104,221

 

 

 

100,307

 

Sales and marketing(1)

 

49,630

 

 

 

47,118

 

 

 

143,155

 

 

 

143,001

 

General and administrative(1)

 

25,955

 

 

 

26,616

 

 

 

77,547

 

 

 

77,316

 

Total operating expenses

 

109,857

 

 

 

108,738

 

 

 

324,923

 

 

 

320,624

 

Loss from operations

 

(20,842

)

 

 

(32,542

)

 

 

(62,815

)

 

 

(102,887

)

Interest income

 

4,522

 

 

 

1,382

 

 

 

11,300

 

 

 

2,760

 

Interest expense

 

(1,454

)

 

 

(1,360

)

 

 

(4,184

)

 

 

(4,072

)

Gain on partial extinguishment of convertible senior notes

 

3,970

 

 

 

 

 

 

3,970

 

 

 

 

Other income (expense), net

 

673

 

 

 

(172

)

 

 

2,982

 

 

 

(1,326

)

Loss before benefit from income taxes

 

(13,131

)

 

 

(32,692

)

 

 

(48,747

)

 

 

(105,525

)

Benefit from income taxes

 

41

 

 

 

(112

)

 

 

197

 

 

 

1,302

 

Net loss

$

(13,090

)

 

$

(32,804

)

 

$

(48,550

)

 

$

(104,223

)

Net loss attributable to redeemable non-controlling interest

 

(324

)

 

 

(262

)

 

 

(1,513

)

 

 

(362

)

Net loss attributable to PagerDuty, Inc.

$

(12,766

)

 

$

(32,542

)

 

$

(47,037

)

 

$

(103,861

)

Adjustment attributable to redeemable non-controlling interest

 

2,359

 

 

 

 

 

 

4,088

 

 

 

 

Net loss attributable to PagerDuty, Inc. common stockholders

$

(15,125

)

 

$

(32,542

)

 

$

(51,125

)

 

$

(103,861

)

Net loss per share, basic and diluted, attributable to PagerDuty, Inc. common stockholders

$

(0.16

)

 

$

(0.36

)

 

$

(0.55

)

 

$

(1.18

)

Weighted-average shares used in calculating net loss per share, basic and diluted

 

93,104

 

 

 

89,285

 

 

 

92,257

 

 

 

88,200

 

(1) Includes stock-based compensation expense as follows:

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Cost of revenue

$

1,820

 

$

1,937

 

$

5,860

 

$

4,948

Research and development

 

11,128

 

 

10,824

 

 

34,002

 

 

30,066

Sales and marketing

 

8,094

 

 

8,004

 

 

22,362

 

 

22,533

General and administrative

 

10,786

 

 

10,679

 

 

32,686

 

 

28,931

Total

$

31,828

 

$

31,444

 

$

94,910

 

$

86,478

PagerDuty, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

As of October 31, 2023

 

As of January 31, 2023

 

 

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

380,307

 

 

$

274,019

 

Investments

 

195,006

 

 

 

202,948

 

Accounts receivable, net of allowance for credit losses of $1,285 and $2,014 as of October 31, 2023 and January 31, 2023, respectively

 

71,106

 

 

 

91,345

 

Deferred contract costs, current

 

18,893

 

 

 

18,674

 

Prepaid expenses and other current assets

 

15,742

 

 

 

13,350

 

Total current assets

 

681,054

 

 

 

600,336

 

Property and equipment, net

 

18,746

 

 

 

18,390

 

Deferred contract costs, non-current

 

24,495

 

 

 

27,715

 

Lease right-of-use assets

 

10,120

 

 

 

13,982

 

Goodwill

 

118,862

 

 

 

118,862

 

Intangible assets, net

 

28,807

 

 

 

37,224

 

Other assets

 

4,646

 

 

 

1,364

 

Total assets

$

886,730

 

 

$

817,873

 

Liabilities, redeemable non-controlling interest, and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

6,763

 

 

$

7,398

 

Accrued expenses and other current liabilities

 

13,323

 

 

 

11,804

 

Accrued compensation

 

28,833

 

 

 

41,834

 

Deferred revenue, current

 

192,920

 

 

 

204,137

 

Lease liabilities, current

 

6,088

 

 

 

5,904

 

Total current liabilities

 

247,927

 

 

 

271,077

 

Convertible senior notes, net

 

447,389

 

 

 

282,908

 

Deferred revenue, non-current

 

3,499

 

 

 

4,914

 

Lease liabilities, non-current

 

8,391

 

 

 

12,704

 

Other liabilities

 

4,933

 

 

 

4,184

 

Total liabilities

 

712,139

 

 

 

575,787

 

Redeemable non-controlling interest

 

5,472

 

 

 

1,108

 

Stockholders’ equity:

 

 

 

Common stock, $0.000005 par value; 1,000,000,000 shares authorized; 94,219,644 and 91,178,671 shares issued and 91,888,642 and 91,178,671 outstanding as of October 31, 2023 and January 31, 2023, respectively

 

 

 

 

 

Additional paid-in-capital

 

745,114

 

 

 

719,816

 

Accumulated other comprehensive loss

 

(1,712

)

 

 

(1,592

)

Accumulated deficit

 

(524,283

)

 

 

(477,246

)

Treasury stock at cost, 2,331,002 and — shares as of October 31, 2023 and January 31, 2023, respectively

 

(50,000

)

 

 

 

Total stockholders’ equity

 

169,119

 

 

 

240,978

 

Total liabilities, redeemable non-controlling interest, and stockholders’ equity

$

886,730

 

 

$

817,873

 

PagerDuty, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands) (unaudited)

 

 

 

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net loss attributable to PagerDuty, Inc. common stockholders

$

(15,125

)

 

$

(32,542

)

 

$

(51,125

)

 

$

(103,861

)

Net loss and adjustment attributable to redeemable non-controlling interest

 

2,035

 

 

 

(262

)

 

 

2,575

 

 

 

(362

)

Net loss

 

(13,090

)

 

 

(32,804

)

 

 

(48,550

)

 

 

(104,223

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

5,025

 

 

 

4,498

 

 

 

15,016

 

 

 

12,778

 

Amortization of deferred contract costs

 

5,123

 

 

 

4,922

 

 

 

15,286

 

 

 

14,178

 

Amortization of debt issuance costs

 

523

 

 

 

461

 

 

 

1,456

 

 

 

1,376

 

Gain on partial extinguishment of convertible senior notes

 

(3,970

)

 

 

 

 

 

(3,970

)

 

 

 

Stock-based compensation

 

31,828

 

 

 

31,444

 

 

 

94,910

 

 

 

86,478

 

Non-cash lease expense

 

1,106

 

 

 

611

 

 

 

3,425

 

 

 

2,913

 

Tax benefit related to release of valuation allowance

 

 

 

 

 

 

 

 

 

 

(1,330

)

Other

 

(1,524

)

 

 

(124

)

 

 

(1,426

)

 

 

1,686

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

(5,420

)

 

 

(13,473

)

 

 

18,983

 

 

 

3,048

 

Deferred contract costs

 

(5,520

)

 

 

(6,290

)

 

 

(12,285

)

 

 

(16,323

)

Prepaid expenses and other assets

 

(1,289

)

 

 

(1,424

)

 

 

(2,674

)

 

 

(2,934

)

Accounts payable

 

(757

)

 

 

1,109

 

 

 

(1,002

)

 

 

(1,117

)

Accrued expenses and other liabilities

 

781

 

 

 

(4,593

)

 

 

767

 

 

 

(1,350

)

Accrued compensation

 

5,706

 

 

 

6,034

 

 

 

(13,086

)

 

 

(624

)

Deferred revenue

 

(119

)

 

 

10,181

 

 

 

(12,547

)

 

 

8,635

 

Lease liabilities

 

(1,486

)

 

 

(1,000

)

 

 

(4,484

)

 

 

(3,783

)

Net cash provided by (used in) operating activities

 

16,917

 

 

 

(448

)

 

 

49,819

 

 

 

(592

)

Cash flows from investing activities

 

 

 

 

 

 

 

Purchases of property and equipment

 

(245

)

 

 

(815

)

 

 

(1,193

)

 

 

(3,755

)

Capitalization of internal-use software costs

 

(1,441

)

 

 

(988

)

 

 

(3,812

)

 

 

(2,725

)

Business acquisition, net of cash acquired

 

 

 

 

 

 

 

 

 

 

(66,262

)

Asset acquisition

 

 

 

 

 

 

 

 

 

 

(1,845

)

Purchases of available-for-sale investments

 

(43,927

)

 

 

(59,842

)

 

 

(151,984

)

 

 

(155,310

)

Proceeds from maturities of available-for-sale investments

 

56,500

 

 

 

54,425

 

 

 

164,064

 

 

 

149,625

 

Purchases of non-marketable equity investments

 

 

 

 

 

 

 

(200

)

 

 

 

Net cash provided by (used in) investing activities

 

10,887

 

 

 

(7,220

)

 

 

6,875

 

 

 

(80,272

)

Cash flows from financing activities

 

 

 

 

 

 

 

Proceeds from issuance of convertible senior notes, net of issuance costs

 

391,543

 

 

 

 

 

 

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

 

 

 

1,908

 

Proceeds from employee stock purchase plan

 

 

 

 

 

 

 

6,292

 

 

 

5,736

 

Proceeds from issuance of common stock upon exercise of stock options

 

973

 

 

 

1,899

 

 

 

8,390

 

 

 

8,459

 

Employee payroll taxes paid related to net share settlement of restricted stock units

 

(9,786

)

 

 

(9,864

)

 

 

(25,772

)

 

 

(22,187

)

Repurchase of common stock

 

(50,000

)

 

 

 

 

 

(50,000

)

 

 

 

Net cash provided by (used in) financing activities

 

54,157

 

 

 

(7,965

)

 

 

53,661

 

 

 

(6,084

)

Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash

 

(177

)

 

 

(365

)

 

 

(451

)

 

 

(504

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

81,784

 

 

 

(15,998

)

 

 

109,904

 

 

 

(87,452

)

Cash, cash equivalents, and restricted cash at beginning of period

 

302,139

 

 

 

278,331

 

 

 

274,019

 

 

 

349,785

 

Cash, cash equivalents, and restricted cash at end of period

$

383,923

 

 

$

262,333

 

 

$

383,923

 

 

$

262,333

 

PagerDuty, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands, except percentages)

(unaudited)

 

 

 

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Reconciliation of gross profit and gross margin

 

 

 

 

 

 

 

GAAP gross profit

$

89,015

 

 

$

76,196

 

 

$

262,108

 

 

$

217,737

 

Plus: Stock-based compensation

 

1,820

 

 

 

1,937

 

 

 

5,860

 

 

 

4,948

 

Plus: Employer taxes related to employee stock transactions

 

21

 

 

 

38

 

 

 

138

 

 

 

79

 

Plus: Amortization of acquired intangible assets

 

2,087

 

 

 

1,949

 

 

 

6,260

 

 

 

5,314

 

Plus: Restructuring costs

 

 

 

 

 

 

 

137

 

 

 

 

Non-GAAP gross profit

$

92,943

 

 

$

80,120

 

 

$

274,503

 

 

$

228,078

 

GAAP gross margin

 

81.9

%

 

 

80.9

%

 

 

82.0

%

 

 

80.7

%

Non-GAAP adjustments

 

3.6

%

 

 

4.2

%

 

 

3.9

%

 

 

3.8

%

Non-GAAP gross margin

 

85.5

%

 

 

85.1

%

 

 

85.9

%

 

 

84.5

%

 

 

 

 

 

 

 

 

Reconciliation of operating expenses

 

 

 

 

 

 

 

GAAP research and development

$

34,272

 

 

$

35,004

 

 

$

104,221

 

 

$

100,307

 

Less: Stock-based compensation

 

(11,128

)

 

 

(10,824

)

 

 

(34,002

)

 

 

(30,066

)

Less: Employer taxes related to employee stock transactions

 

(210

)

 

 

(202

)

 

 

(930

)

 

 

(559

)

Less: Acquisition-related expenses

 

(161

)

 

 

(738

)

 

 

(484

)

 

 

(3,100

)

Less: Amortization of acquired intangible assets

 

(88

)

 

 

(29

)

 

 

(262

)

 

 

(145

)

Less: Restructuring costs

 

 

 

 

 

 

 

5

 

 

 

 

Non-GAAP research and development

$

22,685

 

 

$

23,211

 

 

$

68,548

 

 

$

66,437

 

 

 

 

 

 

 

 

 

GAAP sales and marketing

$

49,630

 

 

$

47,118

 

 

$

143,155

 

 

$

143,001

 

Less: Stock-based compensation

 

(8,094

)

 

 

(8,004

)

 

 

(22,362

)

 

 

(22,533

)

Less: Employer taxes related to employee stock transactions

 

(39

)

 

 

(148

)

 

 

(589

)

 

 

(468

)

Less: Amortization of acquired intangible assets

 

(610

)

 

 

(643

)

 

 

(1,830

)

 

 

(1,936

)

Less: Restructuring costs

 

1

 

 

 

 

 

 

49

 

 

 

 

Non-GAAP sales and marketing

$

40,888

 

 

$

38,323

 

 

$

118,423

 

 

$

118,064

 

 

 

 

 

 

 

 

 

GAAP general and administrative

$

25,955

 

 

$

26,616

 

 

$

77,547

 

 

$

77,316

 

Less: Stock-based compensation

 

(10,786

)

 

 

(10,679

)

 

 

(32,686

)

 

 

(28,931

)

Less: Employer taxes related to employee stock transactions

 

(145

)

 

 

(195

)

 

 

(658

)

 

 

(650

)

Less: Acquisition-related expenses

 

(530

)

 

 

(164

)

 

 

(530

)

 

 

(1,454

)

Less: Amortization of acquired intangible assets

 

(21

)

 

 

(7

)

 

 

(65

)

 

 

(36

)

Less: Restructuring costs

 

(133

)

 

 

 

 

 

(1,451

)

 

 

 

Non-GAAP general and administrative

$

14,340

 

 

$

15,571

 

 

$

42,157

 

 

$

46,245

 

Note: Certain figures 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)

 

 

 

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Reconciliation of operating income (loss) and operating margin

 

 

 

 

 

 

 

GAAP operating loss

$

(20,842

)

 

$

(32,542

)

 

$

(62,815

)

 

$

(102,887

)

Plus: Stock-based compensation

 

31,828

 

 

 

31,444

 

 

 

94,910

 

 

 

86,478

 

Plus: Employer taxes related to employee stock transactions

 

415

 

 

 

583

 

 

 

2,315

 

 

 

1,756

 

Plus: Amortization of acquired intangible assets

 

2,806

 

 

 

2,628

 

 

 

8,417

 

 

 

7,431

 

Plus: Acquisition-related expenses

 

691

 

 

 

902

 

 

 

1,014

 

 

 

4,554

 

Plus: Restructuring costs

 

132

 

 

 

 

 

 

1,534

 

 

 

 

Non-GAAP operating income (loss)

$

15,030

 

 

$

3,015

 

 

$

45,375

 

 

$

(2,668

)

GAAP operating margin

 

(19.2

)%

 

 

(34.5

)%

 

 

(19.7

)%

 

 

(38.1

)%

Non-GAAP adjustments

 

33.0

%

 

 

37.7

%

 

 

33.9

%

 

 

37.1

%

Non-GAAP operating margin

 

13.8

%

 

 

3.2

%

 

 

14.2

%

 

 

(1.0

)%

 

 

 

 

 

 

 

 

Reconciliation of net income (loss)

 

 

 

 

 

 

 

GAAP net loss attributable to PagerDuty, Inc. common stockholders

$

(15,125

)

 

$

(32,542

)

 

$

(51,125

)

 

$

(103,861

)

Plus: Stock-based compensation

 

31,828

 

 

 

31,444

 

 

 

94,910

 

 

 

86,478

 

Plus: Employer taxes related to employee stock transactions

 

415

 

 

 

583

 

 

 

2,315

 

 

 

1,756

 

Plus: Amortization of debt issuance costs

 

523

 

 

 

461

 

 

 

1,456

 

 

 

1,376

 

Plus: Amortization of acquired intangible assets

 

2,806

 

 

 

2,628

 

 

 

8,417

 

 

 

7,431

 

Plus: Acquisition-related expenses

 

691

 

 

 

902

 

 

 

1,014

 

 

 

4,554

 

Plus: Restructuring costs

 

132

 

 

 

 

 

 

1,534

 

 

 

 

Plus: Adjustment attributable to redeemable non-controlling interest

 

2,364

 

 

 

 

 

 

4,093

 

 

 

 

Less: Gain on partial extinguishment of convertible senior notes

 

(3,970

)

 

 

 

 

 

(3,970

)

 

 

 

Less: Income tax effect of non-GAAP adjustments

 

(466

)

 

 

 

 

 

(1,920

)

 

 

(1,330

)

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

$

19,198

 

 

$

3,476

 

 

$

56,724

 

 

$

(3,596

)

 

 

 

 

 

 

 

 

Reconciliation of net income (loss) per share, basic

 

 

 

 

 

 

 

GAAP net loss per share, basic, attributable to PagerDuty, Inc. common stockholders

$

(0.16

)

 

$

(0.36

)

 

$

(0.55

)

 

$

(1.18

)

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

 

0.37

 

 

 

0.40

 

 

 

1.16

 

 

 

1.14

 

Non-GAAP net income (loss) per share, basic, attributable to PagerDuty, Inc. common stockholders

$

0.21

 

 

$

0.04

 

 

$

0.61

 

 

$

(0.04

)

 

 

 

 

 

 

 

 

Reconciliation of net income (loss) per share, diluted(1)

 

 

 

 

 

 

 

GAAP net loss per share, diluted, attributable to PagerDuty, Inc. common stockholders

$

(0.16

)

 

$

(0.36

)

 

$

(0.55

)

 

$

(1.18

)

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

 

0.36

 

 

 

0.40

 

 

 

1.13

 

 

 

1.14

 

Non-GAAP net income (loss) per share, diluted, attributable to PagerDuty, Inc. common stockholders

$

0.20

 

 

$

0.04

 

 

$

0.58

 

 

$

(0.04

)

 

 

 

 

 

 

 

 

Weighted-average shares used in calculating GAAP net loss per share, basic and diluted

 

93,104

 

 

 

89,285

 

 

 

92,257

 

 

 

88,200

 

 

 

 

 

 

 

 

 

Weighted-average shares used in calculating non-GAAP net income (loss) per share

 

 

 

 

 

 

 

Basic

 

93,104

 

 

 

89,285

 

 

 

92,257

 

 

 

88,200

 

Diluted

 

96,235

 

 

 

100,941

 

 

 

100,834

 

 

 

88,200

 

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 shares 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, the numerator used to compute this measure was increased by $0.7 million and $2.5 million for after-tax interest expense savings related to our convertible notes for the three and nine months ended October 31, 2023, respectively.

PagerDuty, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands, except percentages)

(unaudited)

Free Cash Flow

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net cash provided by (used in) operating activities

$

16,917

 

 

$

(448

)

 

$

49,819

 

 

$

(592

)

Less:

 

 

 

 

 

 

 

Purchases of property and equipment

 

(245

)

 

 

(815

)

 

 

(1,193

)

 

 

(3,755

)

Capitalization of internal-use software costs

 

(1,441

)

 

 

(988

)

 

 

(3,812

)

 

 

(2,725

)

Free cash flow

$

15,231

 

 

$

(2,251

)

 

$

44,814

 

 

$

(7,072

)

Net cash used in investing activities

$

10,887

 

 

$

(7,220

)

 

$

6,875

 

 

$

(80,272

)

Net cash provided by (used in) financing activities

$

54,157

 

 

$

(7,965

)

 

$

53,661

 

 

$

(6,084

)

Free cash flow margin

 

14.0

%

 

 

(2.4

)%

 

 

14.0

%

 

 

(2.6

)%

 

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