PagerDuty, Inc. (NYSE:PD), a global leader in digital operations
management, today announced financial results for the first quarter of
fiscal year 2020 ended April 30, 2019.
“We are pleased to report strong Q1 results in our first quarter as a
public company, with revenue accelerating to 49% year-over-year growth
and best-in-class gross margins above 85%,” said Jennifer Tejada, Chief
Executive Officer of PagerDuty. “We continued to see growing demand
across industry verticals and customer segments, especially the
enterprise segment. Our existing customers are expanding their use of
PagerDuty, adding teams and adopting new products like Event
Intelligence and Analytics that enable a more proactive approach to
digital operations. With our community applying PagerDuty to new use
cases every day, we are just scratching the surface of the potential for
our business.”
First Quarter Fiscal 2020 Financial Highlights
- Revenue: Total revenue was $37.3 million, up 49% year-over-year.
-
Gross Margin: GAAP gross margin was 85.3% up 80 basis
points compared to the first quarter of fiscal 2019. Non-GAAP gross
margin was 85.7% compared to Non-GAAP gross margin of 84.7% in the
first quarter of fiscal 2019. -
Operating Loss: GAAP operating loss was $12.7 million, or 34.1%
of revenue, compared to $7.0 million, or 28.0% of revenue, in the
first quarter of fiscal 2019. Non-GAAP operating loss was $7.9
million, or 21.2% of revenue, compared to $3.8 million, or 15.3% of
revenue, in the first quarter of fiscal 2019. -
Net Loss: GAAP net loss was $12.1 million, compared to $6.6
million in the first quarter of fiscal 2019. GAAP net loss per share
was $0.37, compared to $0.32 in the first quarter of fiscal 2019.
Non-GAAP net loss was $7.3 million, compared to $3.4 million in the
first quarter of fiscal 2019. Non-GAAP net loss per share was $0.22,
compared to $0.16 in the first quarter of fiscal 2019. -
Cash Flow: Net cash used in operations was $7.6 million, or
20.3% of revenue, compared to $4.3 million, or 17.2% of revenue, in
the first quarter of fiscal 2019. Free cash flow was negative $8.8
million, or 23.5% of revenue, compared to negative $4.7 million, or
18.8% of revenue, in the first quarter of fiscal 2019. -
Cash and Cash Equivalents were $338.0 million as of
April 30, 2019.
The section titled “Non-GAAP Financial Measures” below contains a
description of the non-GAAP financial measures and reconciliations
between historical GAAP and non-GAAP information.
Recent Highlights
-
Customer Growth: PagerDuty had over 11,600 customers as of
April 30, 2019. New and expansion customers include Zendesk, Yahoo!
Japan, SoundCloud, TripActions, Aveanna Healthcare, Vocalink, and REA
Group. -
Product Innovation: PagerDuty delivered enhancements to Event
Intelligence that use automation and machine learning to more quickly
recognize and prevent potential incidents. We added one-touch
conferencing to Modern Incident Response to connect teams quickly and
introduced status communications and live service updates to keep
impacted teams informed in real-time. Additionally, through new
bi-directional integrations, we enable NOCs, DevOps, Security Ops, and
Customer Support to more effectively respond to incidents together. -
Ecosystem Expansion: PagerDuty’s partner ecosystem surpassed
350 integrations, including more than 25 integrations for Security
Operations teams and deeper integrations with ServiceNow and Slack. -
Awards: PagerDuty was selected as a Best Place to Work in the
Bay Area by the San Francisco Business Times and won a Gold Stevie
award for excellence in customer support.
Financial Outlook
For the second quarter of fiscal 2020, PagerDuty currently expects:
-
Total revenue of $38.5 million – $39.5 million, representing a growth
rate of 39% – 43% year-over-year -
Non-GAAP net loss per share of $0.09 – $0.10, assuming approximately
75 million shares
For the full fiscal year 2020, PagerDuty currently expects:
-
Total revenue of $161 million – $163 million, representing a growth
rate of 37%-38% year-over-year -
Non-GAAP net loss per share of $0.37 – $0.38, assuming approximately
65 million shares
These statements are forward-looking and actual results may differ
materially. Please refer to the Forward-Looking Statements safe harbor
below for information on the factors that could cause our actual results
to differ materially from these forward-looking statements.
PagerDuty has not reconciled its expectations as to non-GAAP net loss
per share to GAAP net loss per share because certain items are out of
its control or cannot be reasonably predicted. Accordingly, a
reconciliation for forward-looking non-GAAP net loss per share is not
available without unreasonable effort.
Conference Call Information:
PagerDuty will host a conference call and live webcast for analysts and
investors at 2:00 p.m. Pacific Time on June 6, 2019. The news release
with the financial results will be accessible from PagerDuty’s website
at investor.pagerduty.com
prior to the conference call. Interested parties can access the call by
dialing (833) 227-5837 or (647) 689-4067 for callers outside North
America, and using the passcode 9284028.
A live webcast of the conference call will be accessible from the
PagerDuty investor relations website at investor.pagerduty.com.
A telephonic replay of the conference call will be available through
June 20, 2019 and may be accessed by dialing (800) 585-8367 or (416)
621-4642 for callers outside North America, and using the conference ID:
9284028.
Supplemental Financial and Other Information:
Supplemental financial and other information can be accessed through
PagerDuty’s investor relations website at investor.pagerduty.com.
PagerDuty uses the investor relations section on its website as the
means of complying with its disclosure obligations under Regulation FD.
Accordingly, we recommend that investors should monitor PagerDuty’s
investor relations website in addition to following PagerDuty’s press
releases, SEC filings, social media, including PagerDuty’s Twitter
account (twitter.com/pagerduty),
the Twitter account @jenntejada and Facebook page (facebook.com/pagerduty),
and public conference calls and webcasts.
Non-GAAP Financial Measures:
This press release and the accompanying tables contain the
following non-GAAP financial measures: non-GAAP gross
profit, non-GAAP gross margin, non-GAAP operating
loss, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss
per share, and free cash flow.
PagerDuty believes that non-GAAP financial measures, when taken
collectively, may be helpful to investors because they provide
consistency and comparability with past financial performance and can
assist in comparisons with other companies, some of which use similar
non-GAAP financial measures to supplement their GAAP results. The
non-GAAP financial information is presented for supplemental
informational purposes only, and should not be considered a substitute
for financial information presented in accordance with GAAP, and may be
different from similarly-titled non-GAAP measures used by other
companies.
The principal limitation of these non-GAAP financial measures is that
they exclude significant expenses and income that are required by GAAP
to be recorded in PagerDuty’s financial statements. In addition, they
are subject to inherent limitations as they reflect the exercise of
judgment by PagerDuty’s management about which expenses and income are
excluded or included in determining these non-GAAP financial measures. A
reconciliation is provided below for each historical non-GAAP financial
measure to the most directly comparable financial measure presented in
accordance with GAAP.
PagerDuty defines non-GAAP operating loss as GAAP loss from operations
and non-GAAP net loss (which is used in calculating non-GAAP net loss
per share) as GAAP net loss excluding share-based compensation expense
and charitable contribution – issuance of common stock warrant. There
are a number of limitations related to the use of these non-GAAP
measures as compared to GAAP operating loss and net loss, including that
the non-GAAP measures exclude share-based compensation expense, which
has been, and will continue to be for the foreseeable future, a
significant recurring expense in PagerDuty’s business and an important
part of its compensation strategy.
PagerDuty defines free cash flow as net cash provided by (used in)
operating activities, less cash used for purchases of property and
equipment. In addition to the reasons stated above, PagerDuty believes
that free cash flow is useful to investors as a liquidity measure
because it measures PagerDuty’s ability to generate or use cash in
excess of its capital investments in property and equipment to enhance
the strength of its balance sheet and further invest in its business and
potential strategic initiatives. PagerDuty uses free cash flow in
conjunction with traditional GAAP measures as part of its overall
assessment of its liquidity, including the preparation of PagerDuty’s
annual operating budget and quarterly forecasts, to evaluate the
effectiveness of its business strategies, and to assess its liquidity.
There are a number of limitations related to the use of free cash flow
as compared to net cash provided by (used in) operating activities,
including that free cash flow includes capital expenditures, the
benefits of which are realized in periods subsequent to those when
expenditures are made.
PagerDuty encourages investors to review the related GAAP financial
measures and the reconciliation of these non-GAAP financial measures to
their most directly comparable GAAP financial measures, which it
includes in press releases announcing quarterly financial results,
including this press release, and not to rely on any single financial
measure to evaluate PagerDuty’s business.
Please see the reconciliation tables at the end of this release for the
reconciliation of GAAP and non-GAAP results.
Forward-Looking Statements:
This press release contains “forward-looking statements” within the
meaning of the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995, including but not limited to, statements
regarding our GAAP and non-GAAP guidance for the second fiscal quarter
and full fiscal 2020 and financial outlook and market positioning. Words
such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,”
“project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,”
“might,” “could,” “intend,” “shall” and variations of these terms or the
negative of these terms and similar expressions are intended to identify
these forward-looking statements. Forward-looking statements are subject
to a number of risks and uncertainties, many of which involve factors or
circumstances that are beyond our control. Our actual results could
differ materially from those stated or implied in forward-looking
statements due to a number of factors, including but not limited to,
risks detailed in our final prospectus related to our initial public
offering filed with the Securities and Exchange Commission (SEC) on
April 11, 2019. Additional information will be made available in our
quarterly report on Form 10-Q for the quarter ended April 30, 2019 and
other filings and reports that we may file from time to time with the
SEC. In particular, the following risks and uncertainties, among others,
could cause results to differ materially from those expressed or implied
by such forward-looking statements: total revenue, non-GAAP net loss per
share and shares outstanding for the second quarter and full year of
fiscal 2020, our ability to achieve and maintain future profitability,
our ability to attract new customers and retain and sell additional
functionality and services to our existing customers, our ability to
sustain and manage our growth, our dependence on revenue from a single
product, our ability to compete effectively in an increasingly
competitive market, and general market, political, economic, and
business conditions. Past performance is not necessarily indicative of
future results. The forward-looking statements included in this press
release represent our views as of the date of this press release. We
anticipate that subsequent events and developments will cause our views
to change. We undertake no intention or obligation to update or revise
any forward-looking statements, whether as a result of new information,
future events or otherwise. These forward-looking statements should not
be relied upon as representing our views as of any date subsequent to
the date of this press release.
About PagerDuty
PagerDuty, Inc. (NYSE: PD) is a leader in digital operations management.
PagerDuty empowers organizations of all sizes with real-time and
data-driven insights to drive better business results. Teams including
DevOps, ITOps, SecOps and Support use PagerDuty’s award-winning platform
for real-time operations to improve operations, deliver exceptional
customer experiences, and accelerate innovation. Today, over 11,600
organizations across all industries have deployed PagerDuty. Notable
customers include IBM, GE, Box, and American Eagle Outfitters. To learn
more and try PagerDuty for free, visit www.pagerduty.com.
Follow our blog and connect with us on Twitter,
LinkedIn,
YouTube
and Facebook.
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PagerDuty, Inc. |
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|
Condensed Consolidated Statements of Operations and (in thousands, except per share data) (unaudited) |
||||||||
| Three Months Ended April 30, | ||||||||
| 2019 | 2018 | |||||||
| Revenue | $ | 37,314 | $ | 25,020 | ||||
| Cost of revenue(1) | 5,486 | 3,885 | ||||||
| Gross profit | 31,828 | 21,135 | ||||||
| Operating expenses: | ||||||||
| Research and development(1) | 10,906 | 7,719 | ||||||
| Sales and marketing(1) | 21,167 | 13,294 | ||||||
| General and administrative(1) | 12,484 | 7,116 | ||||||
| Total operating expenses | 44,557 | 28,129 | ||||||
| Loss from operations | (12,729 | ) | (6,994 | ) | ||||
| Interest income | 889 | 130 | ||||||
| Other income, net | 21 | 389 | ||||||
| Loss before provision for income taxes | (11,819 | ) | (6,475 | ) | ||||
| Provision for income taxes | (245 | ) | (104 | ) | ||||
| Net loss and comprehensive loss | $ | (12,064 | ) | $ | (6,579 | ) | ||
| Net loss per share, basic and diluted | $ | (0.37 | ) | $ | (0.32 | ) | ||
|
Weighted-average shares used in calculating net loss per share, basic and diluted |
32,510 | 20,878 | ||||||
|
(1) Share-based compensation expense included in the condensed consolidated statements of operations was as follows (in thousands, unaudited): |
| Three Months Ended April 30, | ||||||||||||||
| 2019 | 2018 | |||||||||||||
| Cost of revenue | $ | 143 | $ | 61 | ||||||||||
| Research and development | 860 | 715 | ||||||||||||
| Sales and marketing | 1,464 | 852 | ||||||||||||
| General and administrative | 2,345 | 1,529 | ||||||||||||
|
Total |
$ | 4,812 | $ | 3,157 | ||||||||||
|
PagerDuty, Inc. |
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|
Condensed Consolidated Balance Sheets (in thousands)
|
||||||||
| As of April 30, | As of January 31, | |||||||
| 2019 | 2019 | |||||||
| Assets |
(unaudited) |
|||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 338,038 | $ | 127,875 | ||||
|
Accounts receivable, net of allowance for doubtful accounts of $1,965 and $2,360 as of April 30, 2019 and January 31, 2019, respectively |
31,669 | 33,538 | ||||||
| Deferred contract costs, current | 6,559 | 6,002 | ||||||
| Prepaid expenses and other current assets | 7,294 | 5,422 | ||||||
| Total current assets | 383,560 | 172,837 | ||||||
| Property and equipment, net | 7,700 | 5,772 | ||||||
| Deferred contract costs, non-current | 12,087 | 11,470 | ||||||
| Other assets | 3,620 | 7,155 | ||||||
| Total assets | $ | 406,967 | $ | 197,234 | ||||
|
Liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) |
||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 6,252 | $ | 7,657 | ||||
| Accrued expenses and other current liabilities | 7,593 | 7,145 | ||||||
| Accrued compensation | 8,735 | 10,050 | ||||||
| Deferred revenue, current | 66,176 | 63,957 | ||||||
| Total current liabilities | 88,756 | 88,809 | ||||||
| Deferred revenue, non-current | 369 | 147 | ||||||
| Other liabilities | 4,215 | 4,185 | ||||||
| Total liabilities | 93,340 | 93,141 | ||||||
| Redeemable convertible preferred stock | — | 173,023 | ||||||
|
Stockholders’ equity (deficit): |
||||||||
| Common stock | — | — | ||||||
| Additional paid-in-capital | 454,559 | 59,938 | ||||||
| Accumulated deficit | (140,932 | ) | (128,868 | ) | ||||
|
Total stockholders’ equity (deficit) |
313,627 | (68,930 | ) | |||||
|
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) |
$ | 406,967 | $ | 197,234 | ||||
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PagerDuty, Inc. |
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Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) |
||||||||
| Three Months Ended April 30, | ||||||||
| 2019 | 2018 | |||||||
| Cash used in operating activities | ||||||||
| Net loss | $ | (12,064 | ) | $ | (6,579 | ) | ||
|
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization | 470 | 383 | ||||||
| Amortization of deferred contract costs | 1,608 | 833 | ||||||
| Stock-based compensation | 4,812 | 3,157 | ||||||
| Bad debt expense | 281 | 32 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 1,588 | 9 | ||||||
| Deferred contract costs | (2,782 | ) | (2,188 | ) | ||||
| Prepaid expenses and other assets | (1,635 | ) | (2,274 | ) | ||||
| Accounts payable | (1,094 | ) | (1,228 | ) | ||||
| Accrued expenses and other liabilities | 124 | (402 | ) | |||||
| Accrued compensation | (1,315 | ) | 598 | |||||
| Deferred revenue | 2,441 | 3,349 | ||||||
| Net cash used in operating activities | (7,566 | ) | (4,310 | ) | ||||
| Cash used in investing activities | ||||||||
| Purchases of property and equipment | (1,190 | ) | (382 | ) | ||||
| Net cash used in investing activities | (1,190 | ) | (382 | ) | ||||
| Cash from financing activities | ||||||||
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Proceeds from initial public offering, net of underwriters’ discounts and commissions |
220,086 | — | ||||||
| Proceeds from issuance of common stock upon exercise of stock options | 2,240 | 306 | ||||||
| Proceeds from early exercised stock options, net of repurchases | — | (7 | ) | |||||
| Proceeds from repayment of promissory note | 515 | — | ||||||
| Payments of deferred offering costs | (3,923 | ) | — | |||||
| Net cash provided by financing activities | 218,918 | 299 | ||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 210,162 | (4,393 | ) | |||||
| Cash, cash equivalents and restricted cash at beginning of year | 130,323 | 46,451 | ||||||
| Cash, cash equivalents and restricted cash at end of year | $ | 340,485 | $ | 42,058 | ||||
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PagerDuty, Inc. |
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Reconciliation of GAAP to Non-GAAP Data (in thousands, except percentages and per share data) (unaudited) |
||||||||||||
| Three Months Ended April 30, 2019 | ||||||||||||
| GAAP |
Stock-based |
Non-GAAP | ||||||||||
| Cost of revenue | $ | 5,486 | $ |
(143 |
) |
$ | 5,343 | |||||
| Gross profit | 31,828 | 143 | 31,971 | |||||||||
| Gross margin | 85.3 | % | 0.4 | % | 85.7 | % | ||||||
| Operating expenses: | ||||||||||||
| Research and development | 10,906 |
(860 |
) |
10,046 | ||||||||
| Sales and marketing | 21,167 |
(1,464 |
) |
19,703 | ||||||||
| General and administrative | 12,484 |
(2,345 |
) |
10,139 | ||||||||
| Operating loss | (12,729 | ) | 4,812 | (7,917 | ) | |||||||
| Operating margin | (34.1 | )% | 12.9 | % | (21.2 | )% | ||||||
| Net loss | $ | (12,064 | ) | $ | 4,812 | $ | (7,252 | ) | ||||
| Net loss per share | $ | (0.37 | ) | $ | (0.22 | ) | ||||||
| Three Months Ended April 30, 2018 | ||||||||||||
| GAAP |
Stock-based |
Non-GAAP | ||||||||||
| Cost of revenue | $ | 3,885 | $ |
(61 |
) |
$ | 3,824 | |||||
| Gross profit | 21,135 | 61 | 21,196 | |||||||||
| Gross margin | 84.5 | % | 0.2 | % | 84.7 | % | ||||||
| Operating expenses: | ||||||||||||
| Research and development | 7,719 |
(715 |
) |
7,004 | ||||||||
| Sales and marketing | 13,294 |
(852 |
) |
12,442 | ||||||||
| General and administrative | 7,116 |
(1,529 |
) |
5,587 | ||||||||
| Operating loss | (6,994 | ) | 3,157 | (3,837 | ) | |||||||
| Operating margin | (28.0 | )% | 12.6 | % | (15.3 | )% | ||||||
| Net loss | $ | (6,579 | ) | $ | 3,157 | $ | (3,422 | ) | ||||
| Net loss per share | $ | (0.32 | ) | $ | (0.16 | ) | ||||||
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PagerDuty, Inc. |
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Reconciliation of GAAP to Non-GAAP Financial Measures (in thousands, except percentages and per share data) (unaudited)
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Free Cash Flow |
||||||||
| Three Months Ended April 30, | ||||||||
| 2019 | 2018 | |||||||
| Net cash used in operating activities | $ | (7,566 | ) | $ | (4,310 | ) | ||
| Less: | ||||||||
| Purchases of property and equipment | (1,190 | ) | (382 | ) | ||||
| Free cash flow | $ | (8,756 | ) | $ | (4,692 | ) | ||
| Net cash used in investing activities | (1,190 | ) | (382 | ) | ||||
| Net cash provided by financing activities | 218,918 | 299 | ||||||
| Free cash flow margin | (23.5 | )% | (18.8 | )% | ||||
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