8-K
PagerDuty, Inc. (PD)
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): May 30, 2024
_________________________
PagerDuty, Inc.
(Exact name of Registrant as Specified in Its Charter)
_________________________
| Delaware | 001-38856 | 27-2793871 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission File Number) | (IRS Employer<br>Identification No.) |
| 600 Townsend St., Suite 200<br><br>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 class | Trading symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.000005 par value | PD | 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 May 30, 2024, PagerDuty, Inc. (the "Company") reported financial results for the quarter ended April 30, 2024. A copy of the press release is furnished as Exhibit 99.1 to this report 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 8.01 Other Events
On May 30, 2024, the Company also announced that its Board of Directors has authorized a share repurchase program for up to $100 million of common stock. Share repurchases under share repurchase program may be made from time to time on the open market, pursuant to Rule 10b5-1 trading plans, or other legally permissible means. The share repurchase program does not obligate the Company to acquire a specified number of shares, and may be suspended, modified, or terminated at any time, without prior notice. The number of shares to be repurchased will depend on market conditions and other factors. Repurchases under the program are expected to be funded from existing cash balances. The share repurchase program is expected to continue through May 29, 2026, unless extended or shortened by the Board of Directors.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release Issued by PagerDuty, Inc. datedMay 30, 2024 |
| 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. | ||
|---|---|---|
| Dated: May 30, 2024 | By: | /s/ Shelley Webb |
| Shelley Webb | ||
| Senior Vice President, Chief Legal & People Officer |
Document
PagerDuty Announces First Quarter Fiscal 2025 Financial Results
First quarter revenue increased 8% year over year to $111.2 million
First quarter GAAP operating loss of $21.7 million, non-GAAP operating income of $15.3 million
Announces $100 million share repurchase program
SAN FRANCISCO – (BUSINESS WIRE) – May 30, 2024 – PagerDuty, Inc. (NYSE:PD), a leader in digital operations management, today announced financial results for the first quarter of fiscal 2025, ended April 30, 2024.
"PagerDuty delivered a solid first quarter with annual recurring revenue growth stabilizing at 10% for the second consecutive quarter, and non-GAAP operating margin four percentage points above the range,” said Jennifer Tejada, Chairperson and CEO, PagerDuty. “We continue to scale efficiently, delivering our seventh consecutive quarter of non-GAAP profitability. We are encouraged by the stability and momentum emerging from PagerDuty's enterprise focus and success."
PagerDuty also announced today that its Board of Directors has authorized a share repurchase program for up to $100 million of common stock.
“We believe that our business is well positioned for growth and the continuation of meaningful free cash flow,” said Howard Wilson, Chief Financial Officer, PagerDuty. “This share repurchase program signals our desire to manage share dilution and reflects the confidence of the Board and management team in our strategy.”
First Quarter Fiscal 2025 Financial Highlights
•Revenue was $111.2 million, an increase of 7.7% year over year.
•GAAP operating loss was $21.7 million; GAAP operating margin of negative 19.5%.
•Non-GAAP operating income was $15.3 million; non-GAAP operating margin of 13.8%.
•GAAP net loss per share attributable to PagerDuty, Inc. common stockholders was $0.26;
•Non-GAAP net income per diluted share attributable to PagerDuty, Inc. common stockholders was $0.17.
•Operating cash flow was $28.6 million, with free cash flow of $27.1 million.
•Cash, cash equivalents and current investments were $592.8 million as of April 30, 2024.
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.
First Quarter and Recent Highlights
•Customers with annual recurring revenue over $100,000 grew 6% to 811 as of April 30, 2024, compared to 764 a year ago.
•Dollar-based net retention rate of 106% as of April 30, 2024, compared to 116% a year ago.
•Total free and paid customers of more than 29,000 as of April 30, 2024 representing approximately 18% growth year over year.
•Total paid customers of 15,120 as of April 30, 2024, compared to 15,089 a year ago.
•Remaining performance obligations were $388.0 million as of April 30, 2024. Of this amount, the Company expects to recognize revenue of approximately $273.4 million, or 70%, over the next 12 months with the balance to be recognized as revenue thereafter.1
•Lands and expands include: Cisco Systems, DataDog, Equinix, Eventbrite, PriceSmart, Telefonica, Veterans Affairs/VA and ZScaler
•Unveiled advanced AI and automation enhancements to accelerate the resolution of operational issues and increase revenue
•Expanded PagerDuty’s Incident Management product with a new enterprise offering
•Announced Eduardo Crespo as Vice President of EMEA
•Published PagerDuty’s Fourth Annual Impact Report
•Approved for Veterans Affairs Authority to Operate and advanced to “In PMO Review” status on the FedRAMP marketplace.
•Showcased PagerDuty customers - New York Stock Exchange and Ryanair in Executive Spotlight series
1Beginning in the first quarter of fiscal 2025, the Company now includes contracts with an original term of less than 12 months in this disclosure which comprised $135.0 million of remaining non-cancelable performance obligations as of April 30, 2024.
Share Repurchase Program Authorization
In May 2024, the PagerDuty Board of Directors approved the repurchase up to an aggregate of $100 million of its common stock. The repurchases will be made from time to time on the open market at prevailing market prices or in negotiated transactions off the market. The repurchase program is expected to continue through the May 29, 2026 unless extended or shortened by the Board of Directors.
Financial Outlook
For the second quarter of fiscal 2025, PagerDuty currently expects:
•Total revenue of $115.5 million - $117.5 million, representing a growth rate of 7% - 9% year over year
•Non-GAAP net income per diluted share attributable to PagerDuty, Inc. common stockholders of $0.16 - $0.17 assuming approximately 97 million diluted shares and a non-GAAP tax rate of 23%.
For the full fiscal year 2025, PagerDuty currently expects:
•Total revenue of $471.0 million - $477.0 million, representing a growth rate of 9% - 11% year over year
•Non-GAAP net income per diluted share attributable to PagerDuty, Inc. common stockholders of $0.66 - $0.71 assuming approximately 97 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 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 May 30, 2024. 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 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.
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, restructuring costs, adjustment attributable to redeemable non-controlling interest, and income tax adjustments. 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/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 April 30, 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 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. 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.
Investor Relations Contact:
Tony Righetti
investor@pagerduty.com
Press Contact:
Debbie O'Brien
media@pagerduty.com
PagerDuty, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
| Three Months Ended April 30, | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| Revenue | $ | 111,172 | $ | 103,246 |
| Cost of revenue(1) | 19,343 | 17,936 | ||
| Gross profit | 91,829 | 85,310 | ||
| Operating expenses: | ||||
| Research and development(1) | 37,523 | 33,508 | ||
| Sales and marketing(1) | 48,499 | 43,801 | ||
| General and administrative(1) | 27,540 | 23,801 | ||
| Total operating expenses | 113,562 | 101,110 | ||
| Loss from operations | (21,733) | (15,800) | ||
| Interest income | 6,980 | 4,203 | ||
| Interest expense | (2,148) | (1,334) | ||
| Other expense, net | (251) | (13) | ||
| Loss before (provision for) benefit from income taxes | (17,152) | (12,944) | ||
| (Provision for) benefit from income taxes | (193) | 106 | ||
| Net loss | $ | (17,345) | $ | (12,838) |
| Net loss attributable to redeemable non-controlling interest | (206) | (620) | ||
| Net loss attributable to PagerDuty, Inc. | $ | (17,139) | $ | (12,218) |
| Adjustment attributable to redeemable non-controlling interest | 6,917 | — | ||
| Net loss attributable to PagerDuty, Inc. common stockholders | $ | (24,056) | $ | (12,218) |
| Net loss per share, basic and diluted, attributable to PagerDuty, Inc. common stockholders | $ | (0.26) | $ | (0.13) |
| Weighted average shares used in calculating net loss per share, basic and diluted | 92,876 | 91,522 |
(1) Includes stock-based compensation expense as follows:
| Three Months Ended April 30, | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| Cost of revenue | $ | 1,756 | $ | 1,876 |
| Research and development | 11,222 | 10,101 | ||
| Sales and marketing | 7,947 | 5,951 | ||
| General and administrative | 12,015 | 9,617 | ||
| Total | $ | 32,940 | $ | 27,545 |
PagerDuty, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
| As of April 30, 2024 | As of January 31, 2024 | |||
|---|---|---|---|---|
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 382,541 | $ | 363,011 |
| Investments | 210,242 | 208,178 | ||
| Accounts receivable, net of allowance for credit losses of $1,142 and $1,382 as of April 30, 2024 and January 31, 2024, respectively | 77,536 | 100,413 | ||
| Deferred contract costs, current | 19,612 | 19,502 | ||
| Prepaid expenses and other current assets | 17,045 | 12,094 | ||
| Total current assets | 706,976 | 703,198 | ||
| Property and equipment, net | 17,400 | 17,632 | ||
| Deferred contract costs, non-current | 24,532 | 25,118 | ||
| Lease right-of-use assets | 2,943 | 3,789 | ||
| Goodwill | 137,401 | 137,401 | ||
| Intangible assets, net | 29,467 | 32,616 | ||
| Other assets | 5,324 | 5,552 | ||
| Total assets | $ | 924,043 | $ | 925,306 |
| Liabilities, redeemable non-controlling interest, and stockholders’ equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 6,558 | $ | 6,242 |
| Accrued expenses and other current liabilities | 12,893 | 15,472 | ||
| Accrued compensation | 28,609 | 30,239 | ||
| Deferred revenue, current | 219,571 | 223,522 | ||
| Lease liabilities, current | 5,498 | 6,180 | ||
| Total current liabilities | 273,129 | 281,655 | ||
| Convertible senior notes, net | 448,667 | 448,030 | ||
| Deferred revenue, non-current | 4,022 | 4,639 | ||
| Lease liabilities, non-current | 5,979 | 6,809 | ||
| Other liabilities | 4,209 | 5,280 | ||
| Total liabilities | 736,006 | 746,413 | ||
| Redeemable non-controlling interest | 14,004 | 7,293 | ||
| Stockholders’ equity: | ||||
| Common stock | — | — | ||
| Additional paid-in-capital | 794,842 | 774,768 | ||
| Accumulated other comprehensive loss | (1,235) | (733) | ||
| Accumulated deficit | (569,574) | (552,435) | ||
| Treasury stock | (50,000) | (50,000) | ||
| Total stockholders’ equity | 174,033 | 171,600 | ||
| Total liabilities, redeemable non-controlling interest, and stockholders’ equity | $ | 924,043 | $ | 925,306 |
PagerDuty, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands) (unaudited)
| Three Months Ended April 30, | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| Cash flows from operating activities | ||||
| Net loss attributable to PagerDuty, Inc. common stockholders | $ | (24,056) | $ | (12,218) |
| Net loss and adjustment attributable to redeemable non-controlling interest | 6,711 | (620) | ||
| Net loss | (17,345) | (12,838) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||
| Depreciation and amortization | 5,292 | 4,725 | ||
| Amortization of deferred contract costs | 5,279 | 4,990 | ||
| Amortization of debt issuance costs | 608 | 455 | ||
| Stock-based compensation | 32,940 | 27,545 | ||
| Non-cash lease expense | 846 | 1,176 | ||
| Other | (1,302) | (852) | ||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | 22,716 | 30,003 | ||
| Deferred contract costs | (4,805) | (3,372) | ||
| Prepaid expenses and other assets | (4,813) | (2,207) | ||
| Accounts payable | 268 | (1,206) | ||
| Accrued expenses and other liabilities | (3,435) | (244) | ||
| Accrued compensation | (1,667) | (17,286) | ||
| Deferred revenue | (4,423) | (7,246) | ||
| Lease liabilities | (1,512) | (1,491) | ||
| Net cash provided by operating activities | 28,647 | 22,152 | ||
| Cash flows from investing activities | ||||
| Purchases of property and equipment | (457) | (235) | ||
| Capitalization of internal-use software costs | (1,092) | (1,072) | ||
| Purchases of available-for-sale investments | (50,065) | (39,085) | ||
| Proceeds from maturities of available-for-sale investments | 46,556 | 48,955 | ||
| Proceeds from sales of available-for-sale investments | 2,237 | — | ||
| Net cash (used in) provided by investing activities | (2,821) | 8,563 | ||
| Cash flows from financing activities | ||||
| Proceeds from issuance of common stock upon exercise of stock options | 291 | 4,751 | ||
| Employee payroll taxes paid related to net share settlement of restricted stock units | (6,552) | (8,820) | ||
| Net cash used in financing activities | (6,261) | (4,069) | ||
| Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash | (115) | (60) | ||
| Net increase in cash, cash equivalents, and restricted cash | 19,450 | 26,586 | ||
| Cash, cash equivalents, and restricted cash at beginning of period | 366,667 | 274,019 | ||
| Cash, cash equivalents, and restricted cash at end of period | $ | 386,117 | $ | 300,605 |
PagerDuty, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)
| Three Months Ended April 30, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| Reconciliation of gross profit and gross margin | ||||||
| GAAP gross profit | $ | 91,829 | $ | 85,310 | ||
| Plus: Stock-based compensation | 1,756 | 1,876 | ||||
| Plus: Employer taxes related to employee stock transactions | 44 | 72 | ||||
| Plus: Amortization of acquired intangible assets | 2,407 | 2,087 | ||||
| Plus: Restructuring costs | — | 137 | ||||
| Non-GAAP gross profit | $ | 96,036 | $ | 89,482 | ||
| GAAP gross margin | 82.6 | % | 82.6 | % | ||
| Non-GAAP adjustments | 3.8 | % | 4.1 | % | ||
| Non-GAAP gross margin | 86.4 | % | 86.7 | % | ||
| Reconciliation of operating expenses | ||||||
| GAAP research and development | $ | 37,523 | $ | 33,508 | ||
| Less: Stock-based compensation | (11,222) | (10,101) | ||||
| Less: Employer taxes related to employee stock transactions | (282) | (517) | ||||
| Less: Acquisition-related expenses | (295) | (161) | ||||
| Less: Amortization of acquired intangible assets | (87) | (87) | ||||
| Less: Restructuring costs | — | 3 | ||||
| Non-GAAP research and development | $ | 25,637 | $ | 22,645 | ||
| GAAP sales and marketing | $ | 48,499 | $ | 43,801 | ||
| Less: Stock-based compensation | (7,947) | (5,951) | ||||
| Less: Employer taxes related to employee stock transactions | (190) | (267) | ||||
| Less: Amortization of acquired intangible assets | (632) | (610) | ||||
| Less: Restructuring costs | — | 104 | ||||
| Non-GAAP sales and marketing | $ | 39,730 | $ | 37,077 | ||
| GAAP general and administrative | $ | 27,540 | $ | 23,801 | ||
| Less: Stock-based compensation | (12,015) | (9,617) | ||||
| Less: Employer taxes related to employee stock transactions | (187) | (341) | ||||
| Less: Acquisition-related expenses | 32 | — | ||||
| Less: Amortization of acquired intangible assets | (22) | (22) | ||||
| Less: Restructuring costs | (8) | (114) | ||||
| Non-GAAP general and administrative | $ | 15,340 | $ | 13,707 |
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 April 30, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| Reconciliation of operating income (loss) and operating margin | ||||||
| GAAP operating loss | $ | (21,733) | $ | (15,800) | ||
| Plus: Stock-based compensation | 32,940 | 27,545 | ||||
| Plus: Employer taxes related to employee stock transactions | 703 | 1,197 | ||||
| Plus: Amortization of acquired intangible assets | 3,148 | 2,806 | ||||
| Plus: Acquisition-related expenses | 263 | 161 | ||||
| Plus: Restructuring costs | 8 | 144 | ||||
| Non-GAAP operating income (loss) | $ | 15,329 | $ | 16,053 | ||
| GAAP operating margin | (19.5) | % | (15.3) | % | ||
| Non-GAAP adjustments | 33.3 | % | 30.8 | % | ||
| Non-GAAP operating margin | 13.8 | % | 15.5 | % | ||
| Reconciliation of net income (loss) | ||||||
| GAAP net loss attributable to PagerDuty, Inc. common stockholders | $ | (24,056) | $ | (12,218) | ||
| Plus: Stock-based compensation | 32,940 | 27,545 | ||||
| Plus: Employer taxes related to employee stock transactions | 703 | 1,197 | ||||
| Plus: Amortization of debt issuance costs | 608 | 455 | ||||
| Plus: Amortization of acquired intangible assets | 3,148 | 2,806 | ||||
| Plus: Acquisition-related expenses | 263 | 161 | ||||
| Plus: Restructuring costs | 8 | 144 | ||||
| Plus: Adjustment attributable to redeemable non-controlling interest | 6,917 | — | ||||
| Less: Income tax effects and adjustments | (4,526) | (792) | ||||
| Non-GAAP net income attributable to PagerDuty, Inc. common stockholders | $ | 16,005 | $ | 19,298 | ||
| Reconciliation of net income (loss) per share, basic | ||||||
| GAAP net loss per share, basic, attributable to PagerDuty, Inc. common stockholders | $ | (0.26) | $ | (0.13) | ||
| Non-GAAP adjustments to net loss attributable to PagerDuty, Inc. common stockholders | 0.43 | 0.34 | ||||
| Non-GAAP net income per share, basic, attributable to PagerDuty, Inc. common stockholders | $ | 0.17 | $ | 0.21 | ||
| Reconciliation of net income (loss) per share, diluted(1) | ||||||
| GAAP net loss per share, diluted, attributable to PagerDuty, Inc. common stockholders | $ | (0.26) | $ | (0.13) | ||
| Non-GAAP adjustments to net loss attributable to PagerDuty, Inc. common stockholders | 0.43 | 0.33 | ||||
| Non-GAAP net income per share, diluted, attributable to PagerDuty, Inc. common stockholders | $ | 0.17 | $ | 0.20 | ||
| Weighted-average shares used in calculating GAAP net loss per share, basic and diluted | 92,876 | 91,522 | ||||
| Weighted-average shares used in calculating non-GAAP net income per share | ||||||
| Basic | 92,876 | 91,522 | ||||
| Diluted | 96,104 | 103,431 |
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 7.2 million shares related to the convertible notes due 2025 were included in the non-GAAP diluted outstanding share number for the three months ended April 30, 2023, related to the period prior to the election on October 13, 2023. Similarly, the numerator used to compute this measure was increased by $0.9 million for after-tax interest expense savings related to our convertible notes for the three months ended April 30, 2023.
PagerDuty, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)
Free Cash Flow
| Three Months Ended April 30, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| Net cash provided by operating activities | 28,647 | 22,152 | ||||
| Less: | ||||||
| Purchases of property and equipment | (457) | (235) | ||||
| Capitalization of internal-use software costs | (1,092) | (1,072) | ||||
| Free cash flow | $ | 27,098 | $ | 20,845 | ||
| Net cash (used in) provided by investing activities | $ | (2,821) | $ | 8,563 | ||
| Net cash used in financing activities | $ | (6,261) | $ | (4,069) | ||
| Free cash flow margin | 24.4 | % | 20.2 | % |