PagerDuty Inc (NYSE:PD) Posts Mixed Q3 FY2026 Results, Stock Falls on Revenue Miss

PagerDuty Inc (NYSE:PD) reported financial results for its third quarter of fiscal year 2026, delivering a mixed performance that saw the company beat earnings expectations but fall short on revenue, leading to a notable decline in its stock price during after-hours trading.

Quarterly Performance Versus Expectations

The digital operations management leader reported revenue of $124.5 million for the quarter ended October 31, 2025, representing a 4.7% increase compared to the same period last year. However, this figure came in below analyst estimates of $128.8 million. The company's profitability metrics told a more positive story, with non-GAAP earnings per share of $0.33 surpassing the consensus estimate of $0.26.

Key financial highlights from the quarter include:

• Revenue: $124.5 million (4.7% YoY growth) vs. $128.8 million estimated
• Non-GAAP EPS: $0.33 vs. $0.26 estimated
• GAAP Operating Income: $8.1 million, marking the second consecutive quarter of GAAP profitability
• Free Cash Flow: $20.9 million
• Cash, Cash Equivalents, and Investments: $547.8 million

Market Reaction and Financial Outlook

The market reacted negatively to the revenue miss and the company's tempered growth outlook. In after-hours trading following the announcement, PagerDuty's stock declined approximately 5.3%. This reaction appears to be driven by concerns over the company's growth trajectory, as evidenced by its forward guidance.

For the critical fourth quarter of fiscal 2026, PagerDuty provided revenue guidance of $122.0 million to $124.0 million, which represents year-over-year growth of 0% to 2%. This outlook falls significantly short of analyst expectations for Q4 revenue of $131.1 million. For the full fiscal year 2026, the company revised its revenue guidance downward to a range of $490.0 million to $492.0 million, compared to its previous guidance of $493.0 million to $497.0 million and analyst estimates of $510.3 million.

Conversely, the company raised its full-year non-GAAP EPS guidance to a range of $1.11 to $1.12, up from the previous $1.00 to $1.04, indicating a continued focus on profitability and margin expansion.

Operational and Business Highlights

Beyond the financial figures, PagerDuty emphasized several operational achievements and strategic initiatives. The company continues to position itself at the intersection of AI and operational resilience, launching what it describes as the industry's first end-to-end incident management AI Agent Suite.

Notable business metrics and developments include:

• Annual Recurring Revenue (ARR) grew 3% year-over-year to $497 million.
• The number of customers with ARR over $100,000 increased by 5% to 867.
• The dollar-based net retention rate was 100%, down from 107% a year ago.
• Total paid and free customers exceeded 34,000.
• The company announced new partnerships with Glean's AI Ecosystem and the AWS Quicksuite.
• Several executive appointments were made, including a new Chief Revenue Officer.

CEO Jennifer Tejada stated, "We are operating from a position of strength—product leadership, a strong balance sheet, and robust free cash flow—while advancing a pricing and go-to-market transition that supports durable growth."

Conclusion

PagerDuty's third-quarter results present a narrative of a company in transition, successfully expanding profitability but facing headwinds in revenue growth. The significant beat on bottom-line estimates and the raised full-year EPS guidance demonstrate effective cost management and operational discipline. However, the revenue miss and conservative Q4 outlook have clearly concerned investors, as reflected in the after-market stock performance. The company's challenge will be to reignite its growth engine while maintaining its newfound profitability.

For a more detailed look at historical earnings and future analyst estimates, you can review the data here.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. The information presented is based on publicly available data and should not be relied upon as the sole basis for investment decisions.