PagerDuty (PD) AI Stock Analysis

Company Guidance

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.