PagerDuty’s Strong Operating Margins and Customer Growth Highlight Potential Amid Execution Challenges

William Blair analyst Jake Roberge has maintained their bullish stance on PD stock, giving a Buy rating on May 18.

Jake Roberge’s rating is based on several factors that highlight PagerDuty’s potential for future growth despite recent challenges. The company reported strong operating margins of 20%, surpassing consensus estimates, and achieved significant new customer growth, adding 133 paying customers, marking the highest number of additions in eight quarters. These positive indicators suggest that PagerDuty is effectively managing its profitability.
Despite lowering its revenue guidance due to internal execution issues, such as territory reassignments and new representative onboarding, management remains optimistic about the company’s strategic changes. They anticipate that 60% of enterprise sales representatives will be fully productive by the end of the second quarter, which is expected to boost bookings and annual recurring revenue in the latter half of fiscal 2026. Additionally, the raised full-year operating margin outlook to 20.5% reflects confidence in the company’s ability to improve execution and capitalize on its market opportunities.

In another report released on May 18, RBC Capital also maintained a Buy rating on the stock with a $22.00 price target.