Digital operations platform PagerDuty (NYSE:PD) reported Q1 CY2026 results exceeding the market’s revenue expectations, but sales were flat year on year at $121 million. The company expects next quarter’s revenue to be around $123 million, close to analysts’ estimates. Its non-GAAP profit of $0.32 per share was 29.1% above analysts’ consensus estimates.
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PagerDuty (PD) Q1 CY2026 Highlights:
- Revenue: $121 million vs analyst estimates of $119.6 million (flat year on year, 1.2% beat)
- Adjusted EPS: $0.32 vs analyst estimates of $0.25 (29.1% beat)
- Adjusted Operating Income: $29.74 million vs analyst estimates of $22.94 million (24.6% margin, 29.7% beat)
- The company reconfirmed its revenue guidance for the full year of $492.5 million at the midpoint
- Management raised its full-year Adjusted EPS guidance to $1.30 at the midpoint, a 3.2% increase
- Operating Margin: 7.6%, up from -8.6% in the same quarter last year
- Customers: 15,380, up from 15,351 in the previous quarter
- Annual Recurring Revenue: $496 million vs analyst estimates of $496.1 million (flat year on year, in line)
- Billings: $115.4 million at quarter end, up 1.4% year on year
- Market Capitalization: $570.3 million
StockStory’s Take
PagerDuty’s first quarter was marked by a significant leadership transition and positive market response, with the company’s revenue and profitability exceeding Wall Street expectations. Management attributed the quarter’s results to the early traction of its usage-based pricing model, increased platform adoption among large enterprises, and growing demand from AI-native companies. CEO John DiLullo, newly appointed this quarter, emphasized the company’s strengthened foundation and the role of AI and automation in driving operational efficiency. Former CEO Jennifer Tejada highlighted how PagerDuty’s focus on integrating AI into its platform has helped cement its position as a strategic partner for customers managing complex digital operations.
Looking ahead, management believes PagerDuty’s future growth will be driven by continued adoption of its Operations Cloud platform and usage-based pricing, with particular emphasis on expanding multi-product usage among large enterprises and AI-driven organizations. DiLullo emphasized plans to listen, learn, and align closely with customer needs to unlock further value, while Tejada noted that the shift toward AI-first operations is creating new opportunities in traditionally slow-moving sectors. The company expects ongoing product innovation and flexible pricing to support both retention and expansion as more enterprises scale AI deployment in production environments.
Key Insights from Management’s Remarks
Management cited the successful rollout of usage-based pricing, broad customer expansion, and increasing AI-related complexity as key contributors to first quarter performance.
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Leadership transition completed: PagerDuty’s CEO role transitioned from Jennifer Tejada to John DiLullo, after a planned succession process. DiLullo’s prior experience as a customer and partner is expected to bring operational discipline and customer-centric focus.
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Usage-based pricing gaining traction: Early adoption of the Operations Cloud platform with usage-based pricing has driven larger and more strategic customer commitments. Management described this as a key driver behind both improved gross retention and broader product engagement.
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AI increases operational demand: The rising complexity and unpredictability of AI-driven environments has led to new demand for PagerDuty’s solutions, with management emphasizing that AI-related failures can result in costly disruptions, making resilience platforms more critical.
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Expansion in regulated and enterprise sectors: Large enterprises in industries such as automotive, financial services, and healthcare are accelerating adoption of PagerDuty’s platform, with marquee wins including a Fortune 500 automotive manufacturer and a Fortune 100 financial institution.
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Product innovation supporting growth: New features such as SRE Agent (an AI-powered virtual responder) and chat-native incident management have broadened use cases and deepened integration with customer operations, especially among fast-scaling AI-native firms.
Drivers of Future Performance
PagerDuty’s outlook centers on accelerating usage-based platform adoption, deeper AI-driven customer needs, and ongoing operational efficiency to support margin expansion.
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Adoption of Operations Cloud: Management expects broader migration of large enterprise customers to the usage-based Operations Cloud, which allows access to all platform products and incentivizes more cross-departmental use cases. This model is designed to drive higher annual recurring revenue and reduce reliance on seat-based pricing.
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AI as a tailwind: The shift toward AI-first operations introduces new operational risk and complexity, which management believes will increase demand for PagerDuty’s platform. As more enterprises scale AI into production, the need for resilient operations and incident response is expected to grow.
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Focus on operational efficiency: Despite ongoing investments in AI product development and go-to-market transformation, management remains committed to expanding non-GAAP operating margins, leveraging automation internally, and maintaining best-in-class gross margins to support profitable growth.
Catalysts in Upcoming Quarters
In the coming quarters, our analyst team will be watching (1) the pace and breadth of migration to usage-based Operations Cloud contracts among large enterprise customers, (2) the impact of AI adoption on both incident volume and platform expansion, and (3) sustained margin improvement as PagerDuty invests in product innovation and efficiency. Updates on customer retention trends and additional marquee customer wins will also serve as key markers of execution.
PagerDuty currently trades at $8.38, up from $7.43 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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