PagerDuty Inc (NYSE:PD) Reports Mixed Q2 Fiscal 2026 Results, Beating EPS Estimates But Missing on Revenue

PagerDuty Inc (NYSE:PD) reported its second quarter fiscal 2026 earnings, delivering a mixed financial performance that fell short of revenue expectations while exceeding adjusted profit estimates. The digital operations management specialist posted revenue of $123.4 million, representing 6.4% year-over-year growth but missing analyst projections of $127.3 million.

Quarterly Performance Versus Estimates

The company's non-GAAP earnings per share of $0.30 significantly surpassed the consensus estimate of $0.22, marking a substantial beat on profitability metrics. This earnings outperformance occurred despite the revenue shortfall, reflecting improved operational efficiency and cost management.

Key financial highlights from the quarter include:

• Revenue: $123.4 million actual vs. $127.3 million estimated
• Non-GAAP EPS: $0.30 actual vs. $0.22 estimated
• Operating income reached $3.6 million with a 2.9% margin
• Non-GAAP operating income stood at $31.4 million with a 25.4% margin
• Annual recurring revenue grew 5% year-over-year to $499 million

Market Reaction and Price Action

Following the earnings release, PagerDuty shares declined approximately 7.5% in after-hours trading, reflecting investor concern over the revenue miss despite the earnings beat. This negative reaction suggests the market prioritized top-line performance over profitability in its immediate assessment. The stock had shown relative stability in recent weeks, with minimal movement over the past month prior to the earnings announcement.

Forward Guidance and Analyst Expectations

Management provided third quarter revenue guidance of $124-126 million, representing 4-6% year-over-year growth, which falls below analyst expectations of $129.2 million. For the full fiscal year 2026, the company maintained its revenue outlook of $493-497 million while raising its non-GAAP EPS guidance to $1.00-1.04 from the previous range of $0.95-1.00.

The guidance comparison reveals:

• Q3 2026 Revenue Guidance: $124-126 million vs. $129.2 million analyst estimate
• FY 2026 Revenue Guidance: $493-497 million vs. $511.9 million analyst estimate
• FY 2026 EPS Guidance: $1.00-1.04 (raised from $0.95-1.00)

Operational Highlights and Strategic Developments

CEO Jennifer Tejada highlighted several milestones achieved during the quarter, including the company's first GAAP profitable quarter, solid international growth, and customer additions that have already surpassed last year's full-year performance. The company also announced the appointment of Todd McNabb as Chief Revenue Officer, effective September 29, 2025, to lead global go-to-market strategy.

Customer metrics showed steady progress:

• Customers with ARR over $100,000 grew 6% to 868
• Dollar-based net retention rate stood at 102%
• Total paid customers reached 15,322, up from 15,044 year-over-year

The company continues to position itself at the center of the emerging AI ecosystem, emphasizing its role in helping enterprises manage increasing complexity and variability driven by artificial intelligence adoption.

Balance Sheet and Cash Flow

PagerDuty maintained a strong financial position with $567.9 million in cash, cash equivalents, and investments as of July 31, 2025. The company generated $34.0 million in operating cash flow and $30.2 million in free cash flow during the quarter, demonstrating continued operational efficiency and cash generation capability.

For more detailed earnings information and future estimates, readers can review additional data on the company's earnings page.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. The author has no position in PagerDuty Inc. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions.