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PagerDuty (PD) Q2 Loss Narrower Than Expected, Revenues Rise

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PagerDuty, Inc. (PD - Free Report) reported second-quarter fiscal 2020 non-GAAP loss of 4 cents per share, narrower than the Zacks Consensus Estimate of a loss of 6 cents and the year-ago quarter’s loss of 7 cents.

Revenues of $50.7 million increased 25.7% on a year-over-year basis, primarily driven by customer addition. The figure matched the consensus estimate for revenues.

PagerDuty Inc. Price, Consensus and EPS Surprise

PagerDuty Inc. Price, Consensus and EPS Surprise

PagerDuty Inc. price-consensus-eps-surprise-chart | PagerDuty Inc. Quote

Customer Growth

PagerDuty had 13,346 customers as of Jul 31, 2020. New customers within the quarter included The Atlantic, Dignity Health, Genentech, Lowes, Richemont and Telenet and customer expansions included Electronic Arts, Groupon, NCS Pearson, Okta, Postmates, and SAP, among many others.

The company stated that over a third of its enterprise and mid-market customer base expanded within the quarter. This increased adoption was the result of the strong return on investment and business value PagerDuty delivers.

Moreover, PagerDuty now has over 370 total integrations and a deep bench of partners. In the fiscal second quarter, the company’s newly launched Solution Partner and Managed Service Provider partner programs signed and on-boarded new partners, including AHEAD, CDI, Estuate, and HGC Technologies, to help enterprises transform digital operations with the help of integrated solutions and services.

Quarter Details

In second-quarter fiscal 2021, non-GAAP gross profit rose 28.2% year over year to $44.3 million. Gross margin expanded 170 basis points (bps) to 87.4%.

Non-GAAP research & development (R&D) expenses increased 28.1% to $13.1 million. Additionally, non-GAAP sales & marketing (S&M) expenses increased 14.8% year over year to $24.6 million Moreover, non-GAAP general & administrative (G&A) expenses increased 0.4% to $10.1 million.

Total non-GAAP operating expenses increased 14.6% year over year to $47.8 million in the reported quarter.

Non-GAAP operating loss of $3.4 million was narrower than the year-ago quarter’s loss of $7.1 million.

Balance Sheet & Cash Flow

As of Jul 31, 2020, PagerDuty had cash and cash equivalents and current investments of $601.6 million compared with $350.8 million reported in the previous quarter.

Net cash provided by operating activities was $2 million, down 9.1% year over year. Free cash flow was $1.4 million, up 7.7% year over year.

Guidance

For third-quarter fiscal 2021, revenues are anticipated between $52 million and $53 million indicating year-over-year growth of 22%-24%. Non-GAAP net loss per share is expected between 10 cents and 11 cents.

For fiscal 2021, revenues are anticipated between $206 million and $211 million. Non-GAAP net loss per share is expected between 27 cents and 30 cents.

Zacks Rank & Stocks to Consider

Currently, PagerDuty carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks in the broader technology sector include Etsy, Inc. (ETSY - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Dropbox, Inc. (DBX - Free Report) and Lenovo Group Ltd. (LNVGY - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Etsy, Dropbox and Lenovo Group is currently projected at 26.5%, 34.4% and 13.5%, respectively.

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