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Why PagerDuty Stock Was Climbing Today

By Jeremy Bowman – Dec 8, 2021 at 1:42PM

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Shares of the cloud stock gained on a strong earnings report.

What happened

Shares of PagerDuty (PD 0.38%) were moving higher today after the cloud software company topped expectations in its third-quarter earnings report.

As of 12:43 p.m. ET, the stock was up 11.5%.

A digital image of a cloud.

Image source: Getty Images.

So what

PagerDuty provides software that alerts its customers to issues with their connectivity so they can make sure that digital services stay up and running. The company said revenue in the quarter rose 33.5% to $71.8 million, ahead of estimates at $70 million. Meanwhile, paid customer count in the quarter grew from 13,725 to 14,486, and dollar-based net retention rate was 124%, indicating that most of its revenue growth came from existing customers.

On the bottom line, its adjusted loss per share narrowed from $0.08 to $0.07, which was better than the consensus at a loss of $0.09. 

CEO Jennifer Tejada said: "Q3 was an outstanding quarter for PagerDuty as we delivered record revenue of $72 million and grew 33% year over year. Our product innovation continues to accelerate across use cases and departments as we empower enterprises to mature their digital operations and deliver superior customer experiences."

Now what

Looking ahead, the company called for 27%-29% revenue growth in the current quarter to $75.5 million-$76.5 million, ahead of estimates at $73.7 million. On the bottom line, it expects an adjusted per-share loss of $0.05-$0.06, which was also better than the consensus at a per-share loss of $0.08.

PagerDuty's 33% revenue growth was its fastest pace in several quarters. The company is still small at a $3 billion market cap, and is considerably cheaper than most of its SaaS peers at a price-to-sales ratio near 10. If it can maintain that revenue growth rate and take steps to profitability, the stock could have significant upside.

Jeremy Bowman owns shares of PagerDuty. The Motley Fool owns shares of and recommends PagerDuty. The Motley Fool has a disclosure policy.

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