Executive Summary

Q4 FY25 delivered top- and bottom-line beats vs company guidance: revenue $121.4M (+9.3% y/y) and non-GAAP EPS $0.22; non-GAAP operating margin 18.3% and free cash flow $28.6M (23.5% margin) .
Enterprise pivot is progressing: ARR reached $494M (+9% y/y), customers >$100k ARR rose to 849 (+6% y/y), DBNR 106% (enterprise ~10 pts above commercial), with 72 customers >$1M ARR and multiproduct ARR at 65% .
FY26 guide targets modest revenue growth but rising profitability: Q1 FY26 revenue $118–$120M and non-GAAP EPS $0.18–$0.19; FY26 revenue $500–$507M, non-GAAP EPS $0.90–$0.95; implied operating margin 19–20%; non-GAAP tax rate lowered to 22% .
Strategic catalysts: launch of Agentic AI offerings embedded across the Operations Cloud, a new $150M share repurchase authorization, and an increased long‑term operating margin target to 30% support the medium‑term bull case .

What Went Well and What Went Wrong

What Went Well
- Beat guidance with strong operating leverage: non-GAAP operating income $22.3M (18.3% margin) vs prior year’s 9.9%, aided by timing of hiring and marketing/consulting spend .
- Enterprise traction and mix: 72 customers >$1M ARR (+24% y/y); >$100k ARR cohort now 71% of total ARR; multiproduct ARR 65% (62% FY24), underpinning durable net expansion in large accounts .
- AI momentum: unveiled Agentic AI (SRE, Operational Insights, Scheduling Optimization) and embedded PD Advance across plans (with consumption monetization), positioning for larger deals and broader attach .
- Quote: “This quarter's AI innovation…positions PagerDuty well to accelerate enterprise momentum in the second half.” — CEO Jennifer Tejada .
What Went Wrong
- Go-to-market transition still pressuring near-term growth: management acknowledged enterprise sales transformation and talent rotation slowed growth vs initial expectations; large deal conversions remain a focus .
- DBNR edged lower y/y to 106% (from 107%) and Commercial/SMB remains a drag (though stabilizing), moderating overall ARR momentum .
- Commentary stressed gradual financial impact of changes (H2 weighted) and Q1 FY26 calendar headwind (~$3M less revenue due to 3 fewer days), reinforcing front-half conservatism .

Financial Results

Metric	Q2 2025	Q3 2025	Q4 2025
Revenue ($M)	$115.9	$118.9	$121.4
Revenue YoY Growth %	7.7%	9.4%	9.3%
GAAP EPS ($)	(0.14)	(0.07)	(0.12)
Non-GAAP Diluted EPS ($)	0.21	0.25	0.22
GAAP Operating Margin %	(13.8)%	(8.7)%	(9.6)%
Non-GAAP Operating Margin %	17.3%	21.0%	18.3%
GAAP Gross Margin %	82.7%	83.0%	83.6%
Non-GAAP Gross Margin %	86.0%	86.0%	86.5%

KPIs and cash flow

KPI	Q2 2025	Q3 2025	Q4 2025
ARR ($M)	474	483	494
Dollar-Based Net Retention (%)	106%	107%	106%
Customers >$100k ARR	820	825	849
Total Paid Customers	15,044	15,050	15,114
RPO ($M)	403	405	440
RPO to be recognized in 12 months (%)	70%	69%	69%
Cash, Cash Equivalents & Investments ($M)	599.3	542.2	570.8
Free Cash Flow ($M)	33.3	19.4	28.6
Free Cash Flow Margin (%)	28.7%	16.3%	23.5%
Non-GAAP Operating Income ($M)	20.1	25.0	22.3

Additional mix indicators

Metric	FY 2024	FY 2025
ARR from Incident Management (% of total)	73%	70%
ARR from ≥2 paid products (% of total)	62%	65%
Customers ≥$1M ARR (count)	—	72

Notes: Non-GAAP excludes SBC, employer taxes on stock transactions, amortization of acquired intangibles, acquisition-related costs, restructuring, certain debt items, RNC interest adjustments, and tax effects as described in the company’s reconciliations .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q1 FY26	—	$118.0–$120.0	Initial
Non-GAAP Diluted EPS	Q1 FY26	—	$0.18–$0.19 (assumes ~94M diluted shares; 22% tax)	Initial
Revenue ($M)	FY26	—	$500–$507	Initial
Non-GAAP Diluted EPS	FY26	—	$0.90–$0.95 (assumes ~93M diluted shares; 22% tax)	Initial
Implied Operating Margin	FY26	—	19–20% (CFO)	Initial
Non-GAAP Tax Rate	FY26	23% (FY25 usage)	22%	Lowered
Long-term Operating Margin Target	Long-term	20%	30% (raised)	Raised
FY25 Revenue vs Guidance	FY25	$464.5–$466.5	Actual $467.5	Beat
FY25 Non-GAAP Dil. EPS vs Guidance	FY25	$0.78–$0.79	Actual $0.85	Beat
Notes on OI&E / Cash	FY26	—	2028 notes interest in Q1 & Q3; $58M of 2025 notes due in Q2	Modeling detail

Management also flagged a Q1 FY26 calendar headwind (~$3M less revenue vs Q4 FY25 due to three fewer days), shifting ~$3M into the rest of the year .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 FY25)	Current Period (Q4 FY25)	Trend
AI/Technology initiatives	GA of PD Advance; strong attach to AIOps/Automation/CS Ops; July outage showed platform resilience (1,400% surge in incident workflows) .	Launched Agentic AI (SRE, Ops analyst, Scheduling agents); PD Advance embedded across paid tiers with consumption model and use-case library .	Improving adoption/positioning
Enterprise sales motion	Shift to top‑down, multiproduct, multiyear; seasonality and longer cycles; large deal deferrals in Q3 .	Continued enterprise sales transformation; hiring profile update; CRO search; focus on pipeline quality/velocity; H2 weighting .	Improving but still transitioning
Pipeline/ARR trajectory	Pipeline strength into H2; expectation to exit FY25 >10% ARR growth .	Entered FY26 with strong pipeline; expect ARR acceleration in 2H as ramped reps become productive .	Improving (2H weighted)
Regional trends	EMEA brightening with new theater lead; stabilizing .	On-tour events in London/Sydney/Tokyo; building early FY pipeline in key regions .	Improving
Competitive landscape	Best-of-breed independence valued; competition more intense in SMB; Datadog observed but enterprise moat emphasized .	Legacy vendor changes seen as opportunity; retention solid; platform scale/resilience cited as differentiator .	Stable to favorable in enterprise
SMB/Commercial	Headwind with elevated churn/downgrades; signs of stabilization; modest recovery expected .	Commercial targeted to grow modestly in FY26; AI start-ups a source of demand .	Stabilizing
Regulatory drivers	DORA and privacy regimes elevating operations resiliency priority; notable in Financials .	Reinforced as CIO imperative; multiproduct platform adoption supporting ROI cases .	Stable to improving priority
Macro/tariffs	Noted volatility and procurement scrutiny; longer cycles .	Watching tariff environment; focus on execution and ROI-driven deals .	Uncertain macro; execution focus

Management Commentary

Strategic positioning: “We achieved 9% annual growth in both revenue and ARR, while expanding our non-GAAP operating margin by nearly 500 basis points to 18%…free cash flow margin expanding from 15% to 23%.” — CEO Jennifer Tejada .
AI differentiation: “These AI agents…work alongside human responders to intelligently identify, triage and resolve high-value operational issues…deeply integrated into our automation workflows.” — CEO Jennifer Tejada .
Enterprise mix and ARR quality: “Customers spending over $100,000…grew to 849…customers over $1 million increased to 72…Annual recurring revenue from customers using two or more paid products was 65%…” — CFO Howard Wilson .
Profitability focus: “Outperformance relative to guidance was driven by delays [in] head count starts and timing of marketing and consulting expenses.” — CFO Howard Wilson .
Long-term model: “We have updated our long-term operating margin target, increasing it from 20% to 30%.” — CFO Howard Wilson .
Capital returns: “Board…authorized a new share repurchase program for up to $150 million” — Press release .

Q&A Highlights

Macro and tariffs: Management is monitoring potential tariff impacts; deals remain ROI- and efficiency-led with strong account engagement emphasized .
Sales execution and CRO: Leadership/talent rotation toward top‑down platform sellers is yielding faster ramp on large deals; CRO search underway; focus on pipeline conversion and standardized account engagement .
Competitive dynamics: Enterprise win rates supported by platform scale, security, and independence; legacy vendor changes provide displacement opportunities .
Growth phasing: Guide assumes 2H acceleration as ramped reps mature; Q1 ARR growth to remain high single-digit with momentum building thereafter .
Product mix: ~30% of ARR now outside Incident Management; >40% of incremental ARR from AIOps/Automation/CS Ops for two straight quarters; PD Advance monetization early but additive .
SMB/commercial: Modest growth expected in FY26 as stabilization continues, aided by digital-first motions and AI-native start-ups .

Estimates Context

S&P Global consensus: Unable to retrieve Q4 FY25 consensus EPS and revenue due to S&P Global API daily limit; therefore, a comparison to Street consensus is unavailable at this time.
Versus company guidance: PagerDuty delivered revenue of $121.4M vs Q3-issued Q4 guide of $118.5–$120.5M and non-GAAP diluted EPS $0.22 vs $0.15–$0.16, a clear beat on both lines .
FY25 full-year: Revenue $467.5M and non-GAAP diluted EPS $0.85 exceeded the Q3 guidance ranges ($464.5–$466.5; $0.78–$0.79) .
Estimate revisions: With FY26 EPS guided to $0.90–$0.95 and an implied 19–20% non-GAAP operating margin (long-term target 30%), Street models likely need to reflect higher margin trajectory and H2-weighted growth cadence .

Key Takeaways for Investors

Beat-and-raise quality: Q4 topped company guidance on revenue and EPS; FY25 finished above prior full-year guide, while FY26 embeds further margin expansion (19–20%) .
Profitability inflection is real: Non-GAAP operating margin reached 18.3% in Q4 and free cash flow margin 23.5%; long-term operating margin target increased to 30% .
Enterprise-led growth: Larger cohorts (> $100k and > $1M ARR) are expanding, multiproduct penetration rising to 65% of ARR, and Incident Management mix declining (70%), diversifying growth drivers .
AI catalyst: Agentic AI and PD Advance embedded across tiers should support deal sizes and attach over FY26; >40% of incremental ARR from AIOps/Automation/CS Ops for two quarters validates product-market fit .
H1 prudence, H2 acceleration: Q1 FY26 faces a ~$3M calendar headwind and ongoing GTM transition; management anticipates momentum building into 2H as ramped enterprise reps reach productivity .
Capital allocation: New $150M repurchase authorization and strong cash ($571M) underpin share count discipline and balance sheet flexibility .
Watch DBNR/SMB: DBNR at 106% (flat to slightly down y/y) and SMB remains a modest headwind; execution on enterprise transformation and multiyear deals key to re-acceleration .

Guidance Changes (detail and implications)

FY26: $500–$507M revenue and $0.90–$0.95 non-GAAP EPS imply continued modest top-line growth but meaningful operating leverage; non-GAAP tax rate lowered to 22% aids EPS conversion .
Q1 FY26: $118–$120M revenue, $0.18–$0.19 non-GAAP EPS include three fewer days of revenue; remainder of year benefits accordingly (~+$3M) .
Long-term: Operating margin target lifted to 30%, supporting structurally higher profitability as enterprise motion scales .

Additional Relevant Q4 Press Releases

Product: Latest Operations Cloud release and expanded generative AI/automation features (pre-earnings, Feb 25, 2025), underpin the Agentic AI narrative and PD Advance embedding discussed on the call .
Management: Appointment of Chief Customer Officer (Mar 10, 2025) to strengthen adoption and retention at scale .
Earnings announcement PR: Details of Q4 results, share repurchase authorization, ARR/KPI updates, and FY26 guidance matched the 8‑K exhibit .

Non-GAAP definitions and reconciliations are provided in the company’s materials (key exclusions include SBC, employer taxes on equity, acquired intangibles amortization, acquisition-related costs, restructuring, certain debt-related items, RNC adjustments, and tax effects) .

PagerDuty, Inc. (PD)·Q4 2025 Earnings Summary