PagerDuty’s first quarter was marked by a significant leadership transition and positive market response, with the company’s revenue and profitability exceeding Wall Street expectations. Management attributed the quarter’s results to the early traction of its usage-based pricing model, increased platform adoption among large enterprises, and growing demand from AI-native companies. CEO John DiLullo, newly appointed this quarter, emphasized the company’s strengthened foundation and the role of AI and automation in driving operational efficiency. Former CEO Jennifer Tejada highlighted how PagerDuty’s focus on integrating AI into its platform has helped cement its position as a strategic partner for customers managing complex digital operations.
Is now the time to buy PD? Find out in our full research report (it’s free for active Edge members).
PagerDuty (PD) Q1 CY2026 Highlights:
- Revenue: $121 million vs analyst estimates of $119.6 million (flat year on year, 1.2% beat)
- Adjusted EPS: $0.32 vs analyst estimates of $0.25 (29.1% beat)
- Adjusted Operating Income: $29.74 million vs analyst estimates of $22.94 million (24.6% margin, 29.7% beat)
- The company reconfirmed its revenue guidance for the full year of $492.5 million at the midpoint
- Management raised its full-year Adjusted EPS guidance to $1.30 at the midpoint, a 3.2% increase
- Operating Margin: 7.6%, up from -8.6% in the same quarter last year
- Customers: 15,380, up from 15,351 in the previous quarter
- Annual Recurring Revenue: $496 million vs analyst estimates of $496.1 million (flat year on year, in line)
- Billings: $115.4 million at quarter end, up 1.4% year on year
- Market Capitalization: $717.2 million
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From PagerDuty’s Q1 Earnings Call
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Christopher Candelaria (Morgan Stanley): Asked about confidence in stabilizing net retention rates. Former CEO Jennifer Tejada described progress with early cohorts migrating to usage-based pricing and highlighted expansion among customers initially considering downgrades, while CFO Owen Howard Wilson pointed to growing platform usage and successful renewals at higher values.
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Miller Jump (Truist): Inquired about balancing profitability with ongoing AI R&D investment. Tejada explained PagerDuty’s multi-year investment in proprietary AI and use of internal AI tools to boost development efficiency, and Wilson emphasized leveraging high gross margins and AI-driven productivity to fund innovation while expanding margins.
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Andrew Sherman (TD Cowen): Sought clarity on the growth potential of usage-based ARR and customer acceptance of the new model. Wilson stated that meaningful progress is expected among customers with over $100,000 in annual spend, citing strong customer appeal and periodic updates on the transition.
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Andrew Sherman (TD Cowen): Also asked about the traction with AI-native customers and validation of PagerDuty’s technology in that segment. Tejada noted that AI-native firms require resilience earlier in their lifecycle, with rapid expansion occurring through the product-led growth (PLG) motion and increased demand for multi-product offerings.
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**No additional analyst questions were raised on competitive shifts or leadership priorities, with management reiterating their focus on execution and operational resilience in AI-driven environments.
Catalysts in Upcoming Quarters
In the coming quarters, our analyst team will be watching (1) the pace and breadth of migration to usage-based Operations Cloud contracts among large enterprise customers, (2) the impact of AI adoption on both incident volume and platform expansion, and (3) sustained margin improvement as PagerDuty invests in product innovation and efficiency. Updates on customer retention trends and additional marquee customer wins will also serve as key markers of execution.
PagerDuty currently trades at $9.21, up from $7.44 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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