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PD

PagerDuty NYSE:PD Stock Report

Last Price

US$28.20

Market Cap

US$2.5b

7D

0.9%

1Y

-26.2%

Updated

16 Aug, 2022

Data

Company Financials +
PD fundamental analysis
Snowflake Score
Valuation4/6
Future Growth2/6
Past Performance0/6
Financial Health4/6
Dividends0/6

PD Stock Overview

PagerDuty, Inc. operates a digital operations management platform in the United States, Japan, and internationally.

PagerDuty Competitors

Price History & Performance

Summary of all time highs, changes and price drops for PagerDuty
Historical stock prices
Current Share PriceUS$28.20
52 Week HighUS$50.33
52 Week LowUS$21.72
Beta1.09
1 Month Change7.84%
3 Month Change21.92%
1 Year Change-26.18%
3 Year Change-18.26%
5 Year Changen/a
Change since IPO-26.28%

Recent News & Updates

Jul 19

PagerDuty: Interesting Company, But Still Incredibly Expensive

PagerDuty is an interesting company that is working on the really hard problem of "anticipating the unexpected in an unpredictable world." Once you take stock-based compensation into account, it is clear that PagerDuty is nowhere near achieving profitability. Given the massive GAAP losses, and that PagerDuty shows no signs of moderating stock-based compensation, we are rating PD stock as 'Strong Sell'. Given that the NASDAQ (QQQ) and software stocks in particular have been some of the hardest hit in this bear market, we have been searching there for opportunities, but it has been more than challenging finding cheap software stocks, especially when considering the large amounts of stock-based compensation they tend to give out. One company that, at first glance, we found promising and thought would be interesting to analyze is PagerDuty (PD). It is an interesting company that is working on a really hard problem of "anticipating the unexpected in an unpredictable world." What it means by that is it tries to predict when a software application will fail, so as to respond to the issue as fast as possible, ideally even before the issue happens. PagerDuty's technology helps reduce time to troubleshoot issues by ~77%, it reduces unplanned downtime by ~74%, and helps reduce incidents by ~50%. The slide below shows a good overview of PagerDuty's operations cloud and its benefits. PagerDuty Investor Presentation Addressable Market The addressable market for PagerDuty is big to start with, but expands greatly as you add AI/Machine Learning to anticipate incidents and when you add Automation to the technology. By adding incident management, AIOps, and Automation, PagerDuty estimates that its addressable market expands to a massive $36 billion. PagerDuty Investor Presentation PagerDuty Financials One big problem with PagerDuty is that despite showing that it is getting close to break-even in non-GAAP numbers, its GAAP losses are massive, and worst of all, there does not appear to be any significant operating leverage from increasing sales, as operating margins are not showing an upwards trend. We find this very worrisome, as it makes it difficult to see a path to GAAP profitability for the company, unless the company starts to moderate its spending, including its stock-based compensation. Data by YCharts On the positive side, PagerDuty has remarkable retention numbers, with a dollar-based net retention rate of 126% in Q123, with 6 consecutive quarters during which the retention rate is above 120%. The company also showed some growth in paid customers of 8% year over year, but we find this less impressive given that the company is still supposed to be in the early stages of growth. Therefore most of the growth is coming from up-selling current customers, which at some point will start being an issue as the company runs out of add-ons and extra-services to sell to existing customers. PagerDuty Investor Presentation We find it a red flag when GAAP and non-GAAP numbers differ significantly, and in this case PagerDuty is trying to present a financial picture of a company close to break-even, despite massive GAAP losses. Most of this difference comes from stock-based compensation, which the company is giving out in large amounts. PagerDuty Investor Presentation Growth The company is growing revenue at a fast pace, mostly by up-selling customers as we saw, and to a lesser extent by adding new customers. We have no reason to doubt the company that the addressable market is massive, offering the opportunity to grow revenues at a high rate for a long time. We do worry somewhat that most of the growth appears to be coming from existing customers through up-selling, and would find the growth healthier if it was more balanced between up-selling and new customers. PagerDuty Investor Presentation Balance Sheet We have no concerns about the balance sheet which has more cash and short-term investments than long-term debt. Its net cash position is about $185 million which means the company is in no immediate need to raise funding or achieve profitability. Still, it is important to remember that the company remains unprofitable, so the cash is still needed to fund losses and cash-burn. Data by YCharts Stock Based Compensation We find stock-based compensation at PagerDuty to be excessive, at more than 25% of revenues in the trailing twelve months. This is the main reason the company has significantly negative GAAP operating margins, and why it is losing so much money. What is even more worrisome is that the company has been increasing stock-based compensation as revenue has increased, preventing operating leverage from taking hold. Unless the company moderates this expense, we don't see any clear path to profitability. Data by YCharts PD Stock Valuation Some might be tempted to call PagerDuty cheap because it is trading at a historically low multiple to revenues. Its forward EV/Revenues multiple is ~5.75x, less than half the ten-year EV/Revenues average at which the company has traded.

Shareholder Returns

PDUS SoftwareUS Market
7D0.9%3.0%3.6%
1Y-26.2%-14.7%-9.6%

Return vs Industry: PD underperformed the US Software industry which returned -14.7% over the past year.

Return vs Market: PD underperformed the US Market which returned -9.6% over the past year.

Price Volatility

Is PD's price volatile compared to industry and market?
PD volatility
PD Average Weekly Movement9.8%
Software Industry Average Movement10.2%
Market Average Movement7.7%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: PD is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 10% a week.

Volatility Over Time: PD's weekly volatility (10%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
2009950Jennifer Tejadahttps://www.pagerduty.com

PagerDuty, Inc. operates a digital operations management platform in the United States, Japan, and internationally. Its digital operations management platform collects data digital signals from virtually any software-enabled system or device, and leverage powerful machine learning to correlate, process, and predict opportunities and issues. It serves various industries, including software and technology, telecommunications, retail, travel and hospitality, media and entertainment, and financial services.

PagerDuty Fundamentals Summary

How do PagerDuty's earnings and revenue compare to its market cap?
PD fundamental statistics
Market CapUS$2.48b
Earnings (TTM)-US$117.72m
Revenue (TTM)US$303.18m

8.2x

P/S Ratio

-21.0x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
PD income statement (TTM)
RevenueUS$303.18m
Cost of RevenueUS$53.55m
Gross ProfitUS$249.63m
Other ExpensesUS$367.35m
Earnings-US$117.72m

Last Reported Earnings

Apr 30, 2022

Next Earnings Date

Sep 01, 2022

Earnings per share (EPS)-1.34
Gross Margin82.34%
Net Profit Margin-38.83%
Debt/Equity Ratio109.9%

How did PD perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is PD undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

  • Price-To-Sales vs Peers

  • Price-To-Sales vs Industry

  • Price-To-Sales vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for PD?

Other financial metrics that can be useful for relative valuation.

PD key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue7.6x
Enterprise Value/EBITDA-22.5x
PEG Ration/a

Price to Sales Ratio vs Peers

How does PD's PS Ratio compare to its peers?

PD PS Ratio vs Peers
The above table shows the PS ratio for PD vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPSEstimated GrowthMarket Cap
Peer Average9.5x
AI C3.ai
9.4x19.6%US$2.4b
QTWO Q2 Holdings
5.1x17.3%US$2.7b
INST Instructure Holdings
7.8x10.9%US$3.5b
SPT Sprout Social
15.8x27.1%US$3.5b
PD PagerDuty
8.2x22.5%US$2.5b

Price-To-Sales vs Peers: PD is good value based on its Price-To-Sales Ratio (8.2x) compared to the peer average (9.5x).


Price to Earnings Ratio vs Industry

How does PD's PE Ratio compare vs other companies in the US Software Industry?

Price-To-Sales vs Industry: PD is expensive based on its Price-To-Sales Ratio (8.2x) compared to the US Software industry average (5.3x)


Price to Sales Ratio vs Fair Ratio

What is PD's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

PD PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio8.2x
Fair PS Ratio9.4x

Price-To-Sales vs Fair Ratio: PD is good value based on its Price-To-Sales Ratio (8.2x) compared to the estimated Fair Price-To-Sales Ratio (9.4x).


Share Price vs Fair Value

What is the Fair Price of PD when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: PD ($28.2) is trading below our estimate of fair value ($33.25)

Significantly Below Fair Value: PD is trading below fair value, but not by a significant amount.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.


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Future Growth

How is PagerDuty forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


-6.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PD is forecast to remain unprofitable over the next 3 years.

Earnings vs Market: PD is forecast to remain unprofitable over the next 3 years.

High Growth Earnings: PD is forecast to remain unprofitable over the next 3 years.

Revenue vs Market: PD's revenue (22.5% per year) is forecast to grow faster than the US market (7.9% per year).

High Growth Revenue: PD's revenue (22.5% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PD's Return on Equity is forecast to be low in 3 years time (2.4%).


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Past Performance

How has PagerDuty performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-29.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: PD is currently unprofitable.

Growing Profit Margin: PD is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: PD is unprofitable, and losses have increased over the past 5 years at a rate of 29.8% per year.

Accelerating Growth: Unable to compare PD's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: PD is unprofitable, making it difficult to compare its past year earnings growth to the Software industry (18.7%).


Return on Equity

High ROE: PD has a negative Return on Equity (-45.95%), as it is currently unprofitable.


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Financial Health

How is PagerDuty's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Stable Cash Runway

  • Forecast Cash Runway

Financial Position Analysis

Short Term Liabilities: PD's short term assets ($557.9M) exceed its short term liabilities ($219.9M).

Long Term Liabilities: PD's short term assets ($557.9M) exceed its long term liabilities ($308.6M).


Debt to Equity History and Analysis

Debt Level: PD has more cash than its total debt.

Reducing Debt: Insufficient data to determine if PD's debt to equity ratio has reduced over the past 5 years.


Balance Sheet


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: PD has sufficient cash runway for more than 3 years based on its current free cash flow.

Forecast Cash Runway: Insufficient data to determine if PD has enough cash runway if its free cash flow continues to grow or shrink based on historical rates.


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Dividend

What is PagerDuty current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate PD's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate PD's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if PD's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if PD's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as PD has not reported any payouts.


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Management

How experienced are the management team and are they aligned to shareholders interests?

3.3yrs

Average management tenure


CEO

Jennifer Tejada (51 yo)

6.08yrs

Tenure

US$13,268,568

Compensation

Ms. Jennifer G. Tejada serves as an Independent Director at UiPath Inc. since October 2020. She has been Chief Executive Officer and Director at PagerDuty, Inc. since July 21, 2016 and has been its Chairpe...


CEO Compensation Analysis

Compensation vs Market: Jennifer's total compensation ($USD13.27M) is above average for companies of similar size in the US market ($USD6.57M).

Compensation vs Earnings: Jennifer's compensation has increased whilst the company is unprofitable.


Leadership Team

Experienced Management: PD's management team is considered experienced (3.3 years average tenure).


Board Members

Experienced Board: PD's board of directors are considered experienced (3.6 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 5%.


Top Shareholders

Company Information

PagerDuty, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: PagerDuty, Inc.
  • Ticker: PD
  • Exchange: NYSE
  • Founded: 2009
  • Industry: Application Software
  • Sector: Software
  • Implied Market Cap: US$2.477b
  • Shares outstanding: 87.84m
  • Website: https://www.pagerduty.com

Number of Employees


Location

  • PagerDuty, Inc.
  • 600 Townsend Street
  • Suite 125
  • San Francisco
  • California
  • 94103
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/16 00:00
End of Day Share Price2022/08/16 00:00
Earnings2022/04/30
Annual Earnings2022/01/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.