What happened
Shares of PagerDuty (PD -1.38%) tumbled in late morning trading Friday, falling 7% through 11:45 a.m. ET after the digital operations management company reported a modest earnings beat but warned that near-term results could be somewhat worse than expected.
Analysts had forecast that PagerDuty would lose $0.08 per share, pro forma, on sales of $82.7 million in its fiscal first quarter 2023. As it turned out, it lost only $0.04 per share and scored sales of $85.4 million.
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So what
So that's the good news: PagerDuty "beat estimates" in Q1. Now here's the bad news:
Although its 34% growth in revenue was admirable, and its reported pro forma loss was less than expected, PagerDuty still lost money in the quarter -- a lot of money. In fact, when calculated according to generally accepted accounting principles (GAAP), the company's losses in the quarter were $0.38 per share. And this was a loss 41% worse than its $0.27-per-share loss in the same period a year ago.
On top of that, PagerDuty's cash flow statement shows that its cash burn rate is accelerating, too. Instead of the $350,000 in negative free cash flow reported one year ago, the company burned through $5.8 million. That's not as bad as the nearly $33 million in GAAP losses the company reported for the quarter, but it's still not good.
Now what
And PagerDuty's business doesn't look like it will improve much in the current quarter, either. Management is forecasting $87 million to $89 million in revenue for the period, a slowdown to year-over-year growth of between 29% and 32%, with pro forma losses increasing to between $0.08 and $0.09 per share. For the full year, management forecasts sales growth continuing in the 29% to 31% range (between $364 million and $369 million in full-year revenue), with pro forma losses of between $0.17 and $0.21 per share.
Granted, these full-year numbers, at least, are slightly ahead of analyst consensus targets. Beating earnings didn't help PagerDuty much in Q1, and it might not be enough to save the year for the company, either.
