PagerDuty reported annual recurring revenue growth of just $2 million sequentially and about 1% year over year, missing market expectations. Net retention also declined to 98%, down two percentage points from the prior quarter.
Management attributed the slowdown to ongoing seat-based headwinds among customers, which the company expects to continue in the near term.
The company’s outlook added to concerns. PagerDuty forecast fiscal 2027 revenue growth roughly flat at the midpoint of its guidance, compared with prior expectations for about 4% growth. Operating margins are also expected to remain unchanged from fiscal 2026 levels.
William Blair said the results reinforce concerns that the company’s incident management offering may be increasingly pressured by competition from larger software platforms. The brokerage also pointed to seat compression among customers, which may be partly linked to changes in technology spending patterns, including the adoption of artificial intelligence tools.
Customer trends also reflected the pressure. The number of paying customers declined sequentially during the quarter, while the number of customers generating at least $100,000 in annual recurring revenue grew only 1%.
source https://www.investing.com/news/stock-market-news/pagerduty-downgraded-by-william-blair-after-weak-results-flat-growth-outlook-4560602
