EX-99.1 2 pagerdutyq1fy20earningspre.htm EXHIBIT 99.1 Exhibit
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PagerDuty Announces First Quarter Fiscal Year 2020 Financial Results
 
Revenue accelerates to 49% year-over-year growth to a record $37.3 million
Over 11,600 customers now using PagerDuty to power their digital transformations
Best in class gross margins above 85%
 
SAN FRANCISCO – (BUSINESS WIRE) – June 6, 2019 – 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.
 
Investor Relations Contact:
 
Chris Danne, Ellen Davis
The Blueshirt Group
415-217-5865, 415-217-7722
Chris@blueshirtgroup.com, Ellen@blueshirtgroup.com





PagerDuty, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(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.
Condensed Consolidated Balance Sheets
(in thousands)
 
As of April 30,
 
As of January 31,
 
2019
 
2019
 
(unaudited)
 
 
Assets
 
 
 
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





PagerDuty, Inc.
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
 
 
 
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





PagerDuty, Inc.
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 Compensation
 
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 Compensation
 
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
)



PagerDuty, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except percentages and per share data)
(unaudited)

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
)%