The Rise of PagerDuty
PagerDuty (PD) has shown its mettle once again with its fourth-quarter fiscal 2024 non-GAAP earnings, surpassing expectations at 17 cents per share – a remarkable improvement from the year-ago quarter’s 7 cents per share. This surge is reflected in the year-over-year revenue increase of 10.1%, totaling an impressive $111.1 million, fueled by robust growth in the enterprise and mid-market segments. International revenues chipped in significantly, accounting for 28% of the total revenue.
Growth Spurt: Customer Expansion
PagerDuty’s customer base has been a key driver of its success, with a solid total dollar-based net retention rate of 107% as of January 31, 2024. In the relentless pursuit of expansion, the company has seen its customer count soar to over 28,000, marking a 17% increase year over year. Moreover, the number of paid customers stood at an impressive 15,039 by the end of January 31, 2024.
Quarterly Triumphs: Financial Performance Insights
In the fourth quarter of fiscal 2024, PagerDuty witnessed a 9% year-over-year increase in non-GAAP gross profit, reaching $94.9 million. However, the gross margin saw a slight contraction of 80 basis points to 85.4%. As part of its strategic investments, non-GAAP research & development expenses rose by 3.1%, while sales & marketing expenses surged by 6.1% year over year. Nonetheless, non-GAAP general & administrative expenses witnessed a decline of 1.9% from the corresponding period last year. The company’s non-GAAP operating income rose to $11 million, compared to $6.1 million in the prior-year quarter.
Healthy Outlook: Guidance for the Future
Looking ahead, PagerDuty remains optimistic, forecasting revenues between $110.5 million and $112.5 million for the first quarter of fiscal 2025 – signaling a robust growth trajectory. The company anticipates non-GAAP earnings in the range of 12-13 cents per share for the same period. For the full fiscal 2025, PagerDuty is eyeing revenues in the range of $470-$431 million, projecting growth in the 9% to 11% range over fiscal 2024, with non-GAAP earnings expected to fall between 65-70 cents per share. This guidance underscores the company’s confidence in its future prospects.
Market Positioning: Zacks Rank and Key Picks
Despite the recent success, PagerDuty currently carries a Zacks Rank #4 (Sell). However, investors can look to other promising stocks in the sector such as Logitech (LOGI), Meta Platforms (META), and Synopsys (SNPS), each holding a Zacks Rank #1 (Strong Buy). These alternate investment opportunities showcase a bright outlook, with Logitech, Meta Platforms, and Synopsys demonstrating long-term earnings growth rates of 13.13%, 19.5%, and 17.51% respectively.
The perspectives shared in this piece are those of the author and do not necessarily align with the views of Nasdaq, Inc.
