PagerDuty (PD) Q2 2027 Earnings Report

The call conveyed a cautiously optimistic tone: solid operational and financial discipline, GAAP profitability, strong cash generation, ARR surpassing $500M, improved retention metrics, accelerating adoption of the usage‑based AI platform (double‑digit Ops Cloud growth), large enterprise wins, and an improved margin trajectory supported by a targeted restructuring. Offsetting these positives are very modest top‑line growth (revenue up 1% YoY and FY guidance roughly flat), muted billings/RPO growth, and a one‑time workforce reduction with related charges. Management framed the quarter as evidence of early ‘green shoots’ while acknowledging remaining work to fully resolve seat pressure and drive stronger revenue expansion.

PagerDuty guided Q3 revenue of $123.0–$125.0M (midpoint roughly flat YoY) with net income per diluted share of $0.34–$0.36 and an implied non‑GAAP operating margin of 26.5%–27.5%; for FY‑2027 the company expects revenue of $491.5–$496.5M (midpoint ~flat YoY), net income per diluted share of $1.33–$1.37 and an increased operating margin target of 25%–26% (up from 24%–25%), while reaffirming a longer‑term 30% target and saying free cash flow margin will be in line with FY‑26 (versus prior expectation of 2–4 points lower). These targets follow Q2 results of $124.4M revenue (+1% YoY), ~85% gross margin and ~$29.5M non‑GAAP operating income (~24% margin), ARR of $501M (+$6M), dollar‑based net retention of 98%, 884 customers spending >$100k (+24 QoQ), $37M cash from operations and $33M free cash flow (26% FCF margin), $470M cash & investments, TTM billings $501M (+1% YoY), total RPO $426M (up $1M YoY) with ~$309M expected to be recognized in the next 12 months (+5% YoY), ~800k shares repurchased for $7.6M ($92.4M remaining authority), and a ~15% workforce reduction with expected restructuring charges of $5.5–$7.5M (mostly in Q3, substantially complete by end of Q4) that management says will drive run‑rate savings and reinvestment into product and go‑to‑market.