PagerDuty, Inc. Q2 FY2026 earnings call

• Revenue of $123 million, 6% y/y growth, achieved GAAP profitability for the first time. Non-GAAP operating margin reached 25%.
• ARR at $499 million, 5% y/y growth. Dollar-based net retention rate 102%.
• New and expansion bookings up over 15% sequentially. Net new customer additions in first half 208, three times fiscal 2025 full year. High-value customers over $100k at 868.
• Platform usage grew over 25% y/y. Strategic shift to usage-based pricing models. Enterprise go-to-market transformation advanced, especially in international theaters.
• Four new AI agents (Shift, Scribe, Insights, SRE) to GA this quarter. Integration with Amazon Q for agentic AI partnership. Ecosystem partnerships advanced with MCP server unlocking new use cases.
• Appointed Todd McNabb as chief revenue officer to accelerate go-to-market transformation.

In the second quarter, PagerDuty, Inc. delivered revenue of $123 million, representing 6% growth year over year. Annual recurring revenue (ARR) increased to $499 million, a 5% year-over-year growth. International revenue increased 12% annually, contributing 29% of total revenue. The dollar-based net retention rate was 102%. New and expansion bookings increased by more than 15% sequentially. Net new customer additions in the first half were 208, nearly three times the customer adds of fiscal year 2025. The high-value customer base spending over $100,000 expanded to 868 customers. Platform usage grew over 25% year over year.

• Third quarter fiscal 2026 revenue expected in range of $124 million to $126 million (4%-6% growth), net income per diluted share $0.24 to $0.25 (implies 21% operating margin).
• Full fiscal year 2026 revenue expected in range of $493 million to $497 million (5%-6% growth), net income per diluted share $1 to $1.04 (implies 21%-22% operating margin).

Q: Sanjit Singh asked about market growth trend and why PagerDuty's growth in the IT operations segment is lower but quicker to rebound.

A: Jennifer Tejada noted new and expansion revenue up 15% sequentially, net new customer logos up over 200 in first half, which is three times fiscal 2025 full year, and good progress in international regions. Transition to usage-based pricing aligning value with monetization is key.

Q: Koji Ikeda inquired about ARR quality.

A: Jennifer Tejada said shift to large enterprise customers, more than 75% ARR from enterprise companies with revenues over $500M, more than 65% ARR from customers with two or more products, 70% ARR from incident management, and more multiyear contracts.

Q: Jacob Roberge asked about transition to usage-based model.

A: Jennifer Tejada said gradual process over years, customers open to it, usage-based products grew over 60%, customer feedback encouraging, working on flexible licensing and custom pricing.

Q: Andrew Sherman asked about second half drivers and renewal cohort.

A: Jennifer Tejada mentioned 60% of enterprise reps tenured over a year, usage-based pricing early signs, new and expansion improvements, and traction with AI native companies.

Q: Kingsley Crane asked about customer service ops success.

A: Jennifer Tejada said sales reps now having broader conversations, customer service ops attached with operations cloud, and increased usage of PagerDuty Advance.

Q: Jeff Van Rhee asked about seat optimization and sales team tenure.

A: Jennifer Tejada said seat optimization pressure tied to job growth decline, over 60% reps tenured over a year, leadership change in North America sales for better execution.

Q: Miller Jump asked about pipeline impact on sales cycle.

A: Jennifer Tejada said higher quality pipeline, reps ramping, conversion rates expected to improve, and focus on customer engagement.

Q: Mike Richards asked about core incident management pricing.

A: Jennifer Tejada said still working through, likely combination of platform-based and usage-based, learning from AI ops and usage-based models, and seeding AI-led features in all pricing plans.