PagerDuty Q2 Earnings Call Highlights

PagerDuty’s Q2 fiscal 2027 revenue rose 1% to $124.4 million , exceeding guidance, while annual recurring revenue surpassed $500 million and dollar-based net retention improved to 98%.

The company completed a workforce restructuring affecting about 15% of employees, primarily in non-customer-facing roles, and raised its full-year non-GAAP operating-margin outlook to 25%–26%.

PagerDuty plans to broadly launch and rename its AI-powered Operations Cloud as the PD Reliability Platform , designed to automate incident detection, investigation and remediation through its SRE Agent.

PagerDuty NYSE: PD reported second-quarter fiscal 2027 revenue of $124.4 million, up 1% from a year earlier and above the high end of its guidance range, while annual recurring revenue surpassed $500 million for the first time.

The company also raised its full-year operating-margin outlook after completing a workforce restructuring affecting about 15% of employees.

Chief Executive Officer John DiLullo, who recently completed his first 100 days at the company, said the quarter reflected early progress under a new operating framework centered on “build, sell, optimize.” The strategy prioritizes product development, go-to-market execution and reducing spending that does not directly support those two areas.

“We saw brisk new customer acquisition through our online sales efforts, continued growth in our population of enterprise accounts with ARR over $100,000, and expansion of our sales overseas,” DiLullo said. He added that retention improved sequentially, platform event traffic increased, and adoption of the company’s usage-based Operations Cloud offering grew meaningfully from the prior quarter.

Chief Financial Officer Eric Prengel said annual recurring revenue ended the quarter at $501 million, increasing by $6 million during the period. Dollar-based net retention was 98%, improving sequentially, while annualized gross retention also increased from the prior quarter.

PagerDuty added 24 customers spending more than $100,000 annually, bringing that customer count to 884. International revenue accounted for about 30% of total revenue.

Revenue: $124.4 million, up 1% year over year. Non-GAAP gross margin: 85%. Non-GAAP operating income: $29.5 million, representing a 24% operating margin. GAAP net income: $4.7 million, marking the company’s fifth consecutive quarter of GAAP profitability. Cash from operations: $37 million. Free cash flow: $33 million, or a 26% free-cash-flow margin.

The company ended the quarter with $470 million in cash, cash equivalents and investments. On a trailing 12-month basis, billings totaled $501 million, up 1% from a year earlier. Total remaining performance obligations were $426 million, with approximately $309 million expected to be recognized over the following 12 months, up 5% year over year.

PagerDuty repurchased nearly 800,000 shares for $7.6 million during the quarter. It had $92.4 million remaining under its $100 million share-repurchase authorization at quarter-end.

DiLullo said PagerDuty plans to make its AI-powered, usage-based Operations Cloud generally available later this quarter, while renaming it the PD Reliability Platform . The platform is designed to automate and orchestrate the incident-management lifecycle, including detection, investigation and remediation. The company said its SRE Agent sits at the center of the platform and uses knowledge of customer applications and infrastr...