PagerDuty (PD) Q2 2027 earnings summary

Executive summary

• Annual recurring revenue (ARR) reached $501 million, with 15,506 total paid customers and 884 customers generating over $100,000 in ARR; revenue for Q2 FY27 was $124.4 million, up 0.8% year-over-year, exceeding guidance.

• Non-GAAP operating margin was 24% for Q2 FY27, with gross margin at 83.9%-85% and free cash flow margin at 26%.

• Dollar-based net retention rate was 98%, reflecting strong customer loyalty and expansion.

• Fifth consecutive quarter of GAAP profitability, with net income of $4.7 million and non-GAAP net income per diluted share of $0.32.

• Leadership changes included a new CEO, CFO, and board member appointments.

Financial highlights

• Operating income was $10.2 million (8.2% margin); non-GAAP operating income was $29.5 million (23.7%-24% margin).

• Free cash flow for the quarter was $32.8 million, with a margin of 26%-26.3%; cash, cash equivalents, and investments totaled $470 million at quarter end.

• Deferred revenue was $236 million, with $233.5 million classified as current.

• Remaining performance obligations (RPO) stood at $426 million, with $309 million expected to be recognized in the next 12 months.

• Operating cash flow margin for Q2 FY27 was 29.7%-30%.

Outlook and guidance

• Q3 FY27 revenue expected between $123 million and $125 million; non-GAAP operating margin projected at 26.5%-27.5%; non-GAAP net income per diluted share of $0.34–$0.36.

• FY27 revenue guidance is $491.5 million to $496.5 million, with non-GAAP operating margin of 25%-26% and non-GAAP net income per diluted share of $1.33–$1.37.

• Free cash flow margin for FY27 expected to align with FY26 levels, reflecting cost savings from restructuring.

• The restructuring plan is expected to be substantially complete by the end of Q4 FY27.

• Management believes existing liquidity and cash flow from operations will support working capital and capital expenditures for at least the next 12 months.