PagerDuty, Inc. Q4 FY2026 earnings call

Fiscal 2026 was transformational. Stabilized ARR in Q4, accelerated new and expansion business. First GAAP profitable year, increased operating margin. Expanded non-GAAP operating margin by nearly 700 basis points. Total platform customers grew significantly. Expanded relationship with long-time customers. Appointed Scott Aronson to Board and Chris Ferro as Chief Legal Officer. Ranked #1 in Built In's Best Places to Work list, named by Gartner. Served over 650 nonprofit organizations. Prioritized deepening AI capabilities, expanding automation, and broadening use cases. Business priorities for FY '27: strengthen core franchise, embed AI and automation, expand role across enterprise, and leverage AI in operations

In Q4, revenue was $125 million, up 3% year-over-year. Total annual recurring revenue ended the year at $499 million. Non-GAAP operating margin was 24% in Q4, with an expansion of nearly 700 basis points in non-GAAP operating margin throughout the year. Total platform customers grew to over 35,000. Customers spending over $100,000 in annual recurring revenue grew to 861, up 1% year-over-year, and customers with ARR over $1 million increased to 79, up 10% year-over-year. International revenue increased 6% year-over-year, contributing 29% of total revenue. ARR from customers using two or more paid products was 66%, up from 65% in FY '25. ARR contribution from incident management was 70% of the total, and contribution from $100,000 cohort was 72%, up from 71% in FY '25

For Q1 fiscal 2027, revenue expected in range of $118 million to $120 million, net income per diluted share in range of $0.23 to $0.25, implying non-GAAP operating margin of 19% to 20%. For full fiscal year 2027, revenue expected in range of $488.5 million to $496.5 million, net income per diluted share in range of $1.23 to $1.28, implying non-GAAP operating margin of 24% to 25%. FY '27 outlook reflects flat revenue growth midpoint with higher quality of earnings and continued margin expansion. Expect modest operating margin improvements and 8% increase in EPS. Free cash flow margin expected to be approximately 2 to 4 percentage points lower than FY '26

Q: On flex space pricing, receptivity from customers and percentage of base on new model.

A: Flex pricing received positively by large enterprise. Leading indicators like large deals, ARR improvement, etc. will track progress. Anticipate meaningful portion of ARR under new model by end of year.

Q: Best way to create shareholder value.

A: Focus on large enterprise, AI natives, AI first. Leading indicators like large deals, ARR improvement, etc. important.

Q: Customers' view on reliability with AI.

A: AI makes environments more complex, automation etc. important. PagerDuty has architectural advantage. Announced AI ecosystem with partners to help prevent issues.

Q: Go-to-market execution with Todd as CRO.

A: Go-to-market organization embracing new flex pricing. Focus on large strategic platform deals. Incentives focused on growth and gross retention.

Q: $100,000 customers churn.

A: Mix in midrange, some segments under pressure. Value in large enterprise and AI natives.

Q: Customer hiring plans and gross revenue retention.

A: Hiring less impactful with platform/consumption licensing. Customers prioritize enterprise resilience. Conversations about shifting left.

Q: Go-to-market spend and enterprise customers.

A: Reallocating capital, expecting sales and marketing efficiency improvements. $100,000 cohort has mix, focus on top end