The Bull Case For PagerDuty (PD) Could Change Following Retention Pressures And A Securities Probe

• Earlier this month, PagerDuty reported third-quarter fiscal results that beat profit expectations but missed on revenue, highlighted reduced dollar-based net retention, and cut full-year revenue guidance after underestimating customer budget pressures and seat reductions.
• The disclosure of these retention and guidance headwinds has now drawn a federal securities law investigation and prompted diverging analyst opinions on the sustainability of PagerDuty’s growth story.
• We’ll now examine how the reduced net retention and ensuing securities-law investigation may reshape PagerDuty’s previously growth-focused investment narrative.

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PagerDuty Investment Narrative Recap

To own PagerDuty today, you need to believe its Operations Cloud remains central to how modern teams handle always‑on digital services, even as customers tighten budgets and trim seats. The recent revenue miss, lower net retention, and reduced guidance all place more weight on near term execution, while the securities‑law investigation adds headline and legal risk around management’s credibility at exactly the time investors are watching retention trends most closely.

The most relevant recent development is Levi & Korsinsky’s federal securities law investigation following PagerDuty’s disclosure of weaker dollar‑based net retention and lowered full year revenue projections. This compounds existing concerns about revenue stability and upsell potential, and it sits uncomfortably alongside earlier optimism around partnerships, AI features, and usage based pricing as possible growth drivers, making customer expansion and retention the key metrics many investors will likely prioritize in upcoming results.

Yet while product and partnerships might support the long term story, investors should be aware of how intensified seat optimization could...

Read the full narrative on PagerDuty (it's free!)

PagerDuty’s narrative projects $572.1 million revenue and $74.9 million earnings by 2028.

Uncover how PagerDuty's forecasts yield a $16.75 fair value, a 31% upside to its current price.

Exploring Other Perspectives

Three fair value estimates from the Simply Wall St Community span roughly US$12 to about US$27, underscoring how far apart individual views can be. When you set that against the recent hit to dollar based net retention and the legal overhang, it highlights why many market participants are rethinking how resilient PagerDuty’s growth and profitability might really be over time and why it is worth weighing several perspectives before forming a view.

Explore 3 other fair value estimates on PagerDuty - why the stock might be worth over 2x more than the current price!

Build Your Own PagerDuty Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your PagerDuty research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
• Our free PagerDuty research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate PagerDuty's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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