What happened
Shares of PagerDuty (PD -2.70%) were shooting higher today after the cloud-based network-monitoring software maker posted better-than-expected results in its fourth-quarter earnings report and offered strong guidance for the current year.
As of 12:42 p.m. ET, the software stock was up 18%.
Image source: Getty Images.
So what
PagerDuty said revenue in the fourth quarter jumped 32.4% to $78.5 million, outpacing estimates at $76.1 million. Dollar-based net revenue retention increased 124%, an improvement over 121% in the quarter a year ago, showing that existing customers increased their spending by 24%.
Total paid customers increased 7.5% to 14,865, but the company experienced much faster growth with higher-value customers. For instance, customers with annual recurring revenue (ARR) of $100,000 or more increased from 426 to 594, and customers with ARR of more than $1 million rose from 26 to 43, showing the company is gaining customers with larger budgets and ramping up its existing relationships.
On the bottom line, the company's adjusted loss per share narrowed from $0.06 to $0.04, which beat estimates at $0.06.
CEO Jennifer Tejada said: "Driven by ongoing market traction for our new products and strong go-to-market execution, Q4 results capped a fiscal year of accelerating growth for PagerDuty. We delivered revenue of $79 million for the quarter and $281 million for the year, both growing 32% year over year, and gained operating leverage which positions us well for durable growth."
Now what
Looking ahead, PagerDuty's guidance also impressed the market as the company expects revenue growth of 28%-30% to $360 million-$366 million, ahead of the consensus at $352.7 million. On the bottom line, the company sees an adjusted loss per share of $0.17 to $0.23, which compared to the average estimate at $0.19.
Its first-quarter outlook was also better than expected as the company forecast revenue growth of 28%-31% to $81.5 million-$83.5 million, compared to expectations at $80.2 million. On the bottom line, PagerDuty called for an adjusted loss per share of $0.08 to $0.09, which was worse than analyst estimates at $0.06.
Following its recent acquisition of Catalytic, the company will expand its exposure to no-code automation software, which should help it bring more customers up to higher ARR levels, a key growth driver. At a price-to-sales ratio of 10, PagerDuty still looks well priced for the sector.
