PagerDuty, Inc. Q1 FY2026 earnings call

• Jennifer Tejada noted PagerDuty's Q1 revenue of $120 million, 8% growth, and non-GAAP operating margin of 20%. Annual recurring revenue reached $496 million with 7% year-over-year growth. • Dollar-based net retention was impacted by enterprise downgrades and commercial churn, but the company is focusing on improving sales and marketing execution. • The company is evolving its enterprise coverage model from tactical to strategic, scaling pre and post-sale practices, and leveraging AI. • Partnership with AWS was expanded, integrating with Amazon Q business, Bedrock, and AWS Incident Manager. Public sector expansion continued with FedRAMP low authorization. • PagerDuty on tour 2025 had 40% year-over-year attendance increase. Product pricing was evolved for flexibility, and AI agents/solutions were advanced. • Enterprise momentum was shown with large deals in AI, financial services, and international markets. Social impact work and sustainability progress were noted, and Don Cardi joined the board. Search for a new chief revenue officer is ongoing.

In the first quarter, PagerDuty delivered revenue of $120 million, representing 8% growth at the top of its guidance range. Annual recurring revenue increased to $496 million with 7% growth year over year. International revenue increased 11% annually, contributing 28% of total revenue. Q1 gross margin was 86% at the high end of its 84% to 86% target range. Total paid customers grew to 15,247 in Q1, adding 27 net new customers, which was the strongest quarterly customer acquisition in eight quarters.

• For Q2 2026, revenue is expected to be in the range of $122.5 million to $124.5 million, representing a growth rate of 6% to 7%. Net income per diluted share is expected to be in the range of $0.19 to $0.20. • For full fiscal year 2026, revenue is expected to be in the range of $493 million to $499 million, a growth rate of 5% to 7%, adjusting from prior guidance. Net income per diluted share is expected to be in the range of $0.95 to $1.

• Organizational transitions and go-to-market execution challenges may impact results. • Macro environment uncertainty could lead to customer caution in committing to multiyear contracts. • Transitioning enterprise coverage models requires time and execution to bear fruit.

Q: Guys hear me okay?

A: Operator confirms can hear.

Q: Rob Oliver asks about enterprise pressure and execution.

A: Jennifer Tejada states it's primarily execution with coverage gaps due to rep transitions, but new logo growth is strong and reps are ramping with more experience.

Q: Jamie asks about adoption trends in AI modules.

A: Jennifer Tejada mentions early days but generative AI products have strong feedback, reducing friction in access.

Q: Miller Jump asks about enterprise churn and net retention.

A: Jennifer Tejada says churn in enterprise was due to mergers and macro uncertainty, Howard Wilson mentions post-sale changes to improve retention. Net retention expected to be 103%-105%.