PagerDuty (PD) Q2 FY2027 Earnings Call: ARR Tops $500 Million, Margin Outlook Raised
Source Tradingkey
Key Takeaways
- Revenue rose 1% year over year to $124.4 million, while annual recurring revenue reached $501 million after increasing $6 million during the quarter.
- Dollar-based net retention improved sequentially to 98%. The number of customers spending more than $100,000 annually increased by 24 quarter over quarter to 884.
- Non-GAAP operating margin was 24%, while free cash flow reached $33 million, representing a 26% margin. PagerDuty recorded its fifth consecutive quarter of GAAP profitability.
- PagerDuty plans to launch the PD Reliability Platform, formerly Operations Cloud, for general availability later in the quarter. The AI-first platform will use consumption-based pricing and center on the company’s autonomous SRE agent.
- A workforce restructuring affected approximately 15% of employees, primarily in non-customer-facing roles. Management raised full-year non-GAAP operating margin guidance to 25%-26%.
- For Q3 FY2027, management expects revenue of $123 million to $125 million and a non-GAAP operating margin of 26.5%-27.5%.
Core Financial Results
| Metric | Q2 FY2027 result | Change or context |
|---|---|---|
| Revenue | $124.4 million | Up 1% year over year; international revenue was about 30% of total |
| Annual recurring revenue | $501 million | Up $6 million during the quarter |
| Non-GAAP gross margin | 85% | Within management’s target range |
| Non-GAAP operating income | $29.5 million | Approximately 24% operating margin |
| GAAP net income | $4.7 million | Fifth consecutive quarter of GAAP profitability |
| Dollar-based net retention | 98% | Improved sequentially |
| Customers spending over $100,000 annually | 884 | Up 24 from Q1 FY2027 |
| Operating cash flow | $37 million | — |
| Free cash flow | $33 million | 26% free cash flow margin |
| Cash, cash equivalents and investments | $470 million | Quarter-end balance |
| Trailing-12-month billings | $501 million | Up 1% year over year |
| Total RPO | $426 million | Up $1 million year over year |
| RPO expected within 12 months | $309 million | Up 5% year over year |
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