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Investing.com - PagerDuty (NYSE:PD) shares rose after the company reported its fiscal second-quarter 2026 results, with Goldman Sachs maintaining its Neutral rating and $16.00 price target on the stock. According to InvestingPro data, the stock currently trades below its Fair Value, with analysts setting targets ranging from $16 to $23.
The company reported revenue of $123 million, up 6% year-over-year and roughly in line with consensus estimates, while profitability exceeded expectations with non-GAAP operating margin reaching 25%, approximately 800 basis points above consensus. Free cash flow was particularly strong at approximately $30 million, representing a 24% free cash flow margin and exceeding consensus by about 30%. The company maintains impressive gross profit margins of 83.33% and a healthy free cash flow yield, as highlighted in InvestingPro’s analysis.
Annual recurring revenue (ARR) grew to $499 million, a 5% year-over-year increase, though dollar-based net retention eased to 102% from 104% in the previous quarter as customers pursued seat optimization and downgrades. Management characterized this as part of a transition toward usage-based monetization. For deeper insights into PagerDuty’s financial health and growth prospects, InvestingPro subscribers can access 12 additional ProTips and comprehensive financial metrics.
The company showed positive commercial signals, including strong paid net customer additions totaling 208 in the first half, new and expansion bookings rising more than 15% sequentially, and platform usage growing over 25% year-over-year. Additionally, customers with over $100,000 in ARR increased by 20 sequentially to 868, demonstrating early up-market traction.
PagerDuty narrowed its fiscal year 2026 revenue guidance range to $493-$497 million, adjusting the top end of its previous forecast, while ending the quarter with $568 million in cash and announcing a $200 million buyback authorization. The company maintains a strong financial health score of 2.52 (GOOD) according to InvestingPro metrics, with cash holdings exceeding debt obligations.
In other recent news, PagerDuty reported its earnings for the second quarter of fiscal year 2026, surpassing analysts’ expectations with earnings per share of $0.30, compared to the forecasted $0.20. However, the company’s revenue of $123 million slightly missed the anticipated $123.65 million. Despite the earnings beat, the revenue shortfall was noted by investors. Additionally, Canaccord Genuity adjusted its price target for PagerDuty, lowering it from $21.00 to $19.00, while maintaining a Buy rating on the stock. The firm highlighted expectations for a potential growth inflection in fiscal year 2027, contingent upon the growth of small and medium-sized businesses and the strategic positioning of PagerDuty in large enterprises. These developments reflect the ongoing adjustments and expectations surrounding PagerDuty’s financial performance and market position.
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