To The Moon

$PagerDuty, Inc.(PD)$ is set to report its fiscal Q2 2026 earnings after the market closes on Wednesday, September 3, 2025.

Here is an analysis of the key metrics to watch and potential opportunities for short-term trading.

Revenue and EPS: The consensus analyst estimates for Q2 2026 are for revenue of approximately $123.6 million and non-GAAP EPS of around $0.20. PagerDuty's own guidance for the quarter is a revenue range of $122.5 million to $124.5 million. Beating these estimates will be a primary driver of stock movement, but a miss could be met with a significant sell-off.

Summary of PagerDuty (PD) Fiscal Q1 2026 Earnings

PagerDuty (PD) reported a mixed bag for its fiscal Q1 2026, beating analyst expectations on the top and bottom lines but providing a disappointing outlook.

Financial Performance: The company exceeded expectations with revenue of $120 million, marking an 8% year-over-year increase. Non-GAAP EPS of $0.24 was also a significant beat over the consensus estimate of $0.19. This solid performance was driven by a strong non-GAAP operating margin of 20%, which exceeded the company's own guidance. PagerDuty also demonstrated strong cash flow generation.

Operational Metrics: Annual Recurring Revenue (ARR) grew 7% year-over-year to $496 million. However, a key metric, the Dollar-Based Net Retention (DBNR) rate, was a point of concern at 104%, down from 106% in the previous quarter. Management attributed this to higher-than-expected customer downgrades in the enterprise segment and elevated churn in the commercial business.

Strategic Focus: The company highlighted its ongoing "enterprise transformation" and its focus on scaling its sales and services, while also advancing its AI-powered "Operations Cloud" platform. PagerDuty noted the successful integration of AI agents and a new partnership with AWS.

Lessons Learned from the Guidance

The guidance provided for fiscal Q2 and the full fiscal year 2026 was the key factor behind the negative market reaction to an otherwise strong quarter.

Growth Deceleration is a Major Concern: The most significant lesson is that PagerDuty's growth is decelerating, and the company's own guidance reflected this. While Q1 saw an 8% revenue growth, the company's guidance for Q2 was a mere 6%-7% year-over-year growth. Even more concerning, the full-year revenue forecast was lowered to a range of $493 million to $499 million, down from the prior guidance of $500 million to $507 million. This signals that the company is facing headwinds in its ability to expand its customer base and grow its top line.

Focus on Profitability is a Double-Edged Sword: While PagerDuty is successfully improving its non-GAAP operating margins and achieving profitability, the market is interpreting this as coming at the expense of growth. The guidance suggests that the company is prioritizing bottom-line performance over top-line expansion, which is a concern for a growth-oriented SaaS stock. The lesson is that for a company like PagerDuty, the market's primary focus remains on growth, and a trade-off for profitability is often punished.

Customer Metrics Matter More Than Just Headline Beats: The disappointing DBNR rate, despite the revenue beat, underscored investor concerns. It revealed that PagerDuty is struggling to upsell existing customers, which is a red flag for the long-term health of a SaaS business. The lesson is that in the software industry, key operational metrics like retention and customer growth can be more influential on investor sentiment than a simple beat on revenue or EPS. The guidance confirmed that these challenges are expected to persist, overshadowing the company's otherwise solid financial results.

Key Metrics for PagerDuty's Q2 2026 Earnings

Investors will be looking for signs that PagerDuty's growth is re-accelerating and its path to profitability is on track.

Annual Recurring Revenue (ARR): As a SaaS (Software-as-a-Service) company, ARR is a critical indicator of PagerDuty's health and future growth potential. Investors will want to see continued growth in ARR, particularly from its enterprise and high-value customers. Commentary on the total number of customers, especially those with an ARR over $100,000, will be a key focus.

Dollar-Based Net Retention Rate (DBNR): This metric measures the spending of existing customers over time and is a vital sign of product stickiness and expansion. The company's DBNR has been a source of concern in recent quarters, hovering around 104%. Any improvement or even a stabilization of this metric would be a positive signal that customers are expanding their use of PagerDuty's platform, particularly with its new AI-powered features.

Operating Margin and Profitability: PagerDuty has made a strong push towards profitability. Investors will be watching the non-GAAP operating margin, which was 20% in the previous quarter. The company's ability to maintain or improve this margin while still investing in growth will be a key lesson from the earnings report. A clear path to sustained profitability is crucial for a company with a high debt-to-equity ratio and negative GAAP earnings.

PagerDuty (PD) Price Target

Based on 9 analysts from Tiger Brokers offering 12 month price targets for PagerDuty in the last 3 months. The average price target is $19.11 with a high forecast of $23.00 and a low forecast of $15.00. The average price target represents a 18.56% change from the last price of $16.74.

Opportunities for Short-Term Trading

Short-term trading around PagerDuty's earnings report carries both high potential and high risk.

Valuation and Volatility: PagerDuty's stock has been volatile, and its valuation is a point of contention among analysts. A significant earnings beat, especially if accompanied by strong guidance and an improving DBNR, could lead to a sharp rally as it would signal a potential inflection point in the company's growth story.

PagerDuty (PD) had 60-Day Historical Volatility (Close-to-Close) of 0.4334 for 2025-08-29.

The "AI" Narrative: PagerDuty has been integrating AI into its platform, and any positive commentary on the adoption and monetization of these new features could spark a rally. A clear roadmap for how AI will drive future revenue growth and improve efficiency will be a key positive catalyst.

Risk of a Miss: If PagerDuty misses on key metrics like revenue or DBNR, or if its guidance is conservative, the stock could face significant selling pressure. The high expectations surrounding its profitability push and AI initiatives mean that any disappointment could be punished severely.

Post-Earnings Price Action: PagerDuty has a history of beating earnings estimates, which might lead to a "sell the news" event if the results are merely in-line. Traders should be prepared for a quick move in either direction and consider the company's past post-earnings volatility. Due to the high risk, options premiums are likely to be expensive, making simple long calls or puts a high-stakes bet.

Technical Analysis - Exponential Moving Average (EMA)

Though we are seeing PD trading in positive momentum, but the stock price is still trading below the 200-day period now, and did not manage to make a significant upside move, though we saw an attempt recently, so we might to see a strong earnings beat and positive guidance, because any misses or conservative guidance could see investors going into selling off mode.

I would think the recent pullback might be a chance to take opportunities in case of a post-earnings short rally.

Summary

PagerDuty (PD) is set to report its fiscal Q2 2026 earnings on September 3, 2025. Investors will be closely watching for signs of growth acceleration and continued progress toward profitability.

Key metrics to monitor include:

Revenue and EPS: The consensus is for revenue of about $123.6 million and non-GAAP EPS of $0.20. PagerDuty's own guidance for revenue is between $122.5 million and $124.5 million.

Dollar-Based Net Retention Rate (DBNR): This is a crucial metric for the SaaS company, as it indicates whether existing customers are expanding their spending.

Operating Margin: The company's push toward profitability is a key focus. Investors will want to see continued improvement in non-GAAP operating margin.

Given the stock's volatility and the mixed performance of its previous guidance, short-term trading is high-risk. A beat on key metrics, especially DBNR and strong forward guidance, could lead to a significant rally. Conversely, any signs of decelerating growth or a conservative outlook could trigger a sharp sell-off as the market re-evaluates its growth potential.

Appreciate if you could share your thoughts in the comment section whether you think PD could provide a stronger Dollar-Based Net Retention Rate (DBNR) and a stronger forward guidance should help to produce a short-term rally for this stock.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.