PagerDuty, Inc. (NYSE: PD) is an on-call management software company. Its platform collects digital signals from almost any software-enabled system or device, integrates them with human response data, and orchestrates teams to execute the appropriate actions in real-time. The primary source of revenue is cloud-hosted subscription fees, which account for the majority of its revenue.
- Agreement with AWS: On November 29, 2021, PD announced a multi-year go-to-market deal with Amazon Web Services, Inc. (AWS) to ensure that customers' cloud migration and digital operational maturity journeys are as smooth as possible. PD also revealed that a fully managed Rundeck Cloud automation option will be available on AWS in early 2022 and an enterprise offering on AWS Marketplace to show its commitment to the partnership.
- New Capabilities to Enhance Value: On November 16, 2021, PD announced additional capabilities to support businesses' digital-first approach as they strive to satisfy heightened customer demands. The new event management system's unique integration with operations automation eliminates manual processes and toil, automates labour, and promotes best practises across distant teams
- Growth in Topline: The company's revenue increased by 31.51% to USD 202.89 million during 9MFY22 (ended October 31, 2021) from USD 154.27 million during 9MFY21.
- Increase in Net Losses: PD witnessed an increase in net losses to USD 78.56 million during 9MFY22 vs. USD 46.76 million during 9MFY21.
- Healthy Balance Sheet: The company had USD 545.29 million in cash and cash equivalents (including short-term investments) as of October 31, 2021, with outstanding debt of USD 280.62 million.
- Product Concentration Risk: Subscription sales for the company's On-Call Management solution account for nearly all of the company's revenue. The company expects subscriptions to account for a significant amount of its revenue for the foreseeable future. The company's operating situation could be harmed due to a drop in demand for its product, technical advancements, and a stagnant market for real-time operations platforms.
- Seasonal Business Risk: Each year's first quarter is often the lowest in billings and bookings. The company's first-quarter billings and bookings are often lower than the previous fourth quarter. As it continues to target larger enterprise customers, the firm expects this seasonality to affect billings, bookings, and other operating outcomes in the future.
- Q4FY22 Estimates: PD forecasts total revenue of USD 75.5–76.5 million for Q4FY22 in its Q3FY22 earnings report, showing a growth rate of 27 to 29% YoY. It also anticipates a Non-GAAP net loss per share of USD 0.06-0.05, based on 86 million shares.
- FY22 Estimates: PD anticipates overall revenues of USD 278.5-279.5 million in FY22, reflecting a 30 to 31% YoY increase. It also predicts a Non-GAAP net loss per share of USD 0.34-0.33 based on 84 million shares.
Valuation Methodology: EV/Sales Multiple Based Relative Valuation
(Analysis by Kalkine Group)
- % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.