Shares of PagerDuty (PD) cratered in after-hours trading after the software company reported earnings for its second quarter of Fiscal Year 2025, which was followed by disappointing guidance. Earnings per share came in at $0.21, which beat analysts’ consensus estimate of $0.17 per share. In addition, sales increased by 7.8% year-over-year, with revenue hitting $116 million. However, this missed analysts’ expectations by $0.5 million.
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The revenue miss can be attributed to year-over-year decreases in the net retention rate (going from 114% to 106%) and total paying customers (from 15,146 to 15,044). Nevertheless, these declines were offset by a 20% increase in the number of customers with annual recurring revenue greater than $500K.
Looking forward, management now expects revenue and adjusted earnings per share for FY 2025 to be in the ranges of $463 million – $467 million and $0.67 – $0.72, respectively. For reference, analysts were expecting $473.7 million in revenue along with an adjusted EPS of $0.70.
Is PD a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on PD stock based on three Buys, four Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 20% decline in its share price over the past year, the average PD price target of $23.50 per share implies 23.04% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
