0001568100-26-000012
SEC filingPagerDuty, Inc. reported strong financial performance for fiscal year 2026, achieving profitability with significant revenue growth and a substantial net income driven by a tax benefit. Revenue reached $492.5 million, generating a gross profit of $418.4 million with an 85.0% gross margin. The company recorded operating income of $5.8 million, marking a positive shift from prior periods. Net income attributable to common stockholders was $173.9 million, primarily due to a $152.5 million tax benefit. Operating cash flow was robust at $114.9 million, while the company used $206.4 million in financing activities primarily for stock repurchases and debt repayments. The balance sheet shows total assets of $990.5 million with $237.4 million in cash and equivalents, and total liabilities of $719.9 million including $395.7 million in convertible notes. International operations contributed 29% of total revenue, demonstrating global reach.
PagerDuty, Inc. delivered strong financial results for fiscal year 2026, achieving profitability with revenue of $492.5 million and net income of $172.7 million. The company generated $418.4 million in gross profit with an 85.0% gross margin, reflecting efficient cost management. Operating income was $5.8 million, marking a positive operational performance. The significant net income was primarily driven by a $152.5 million tax benefit. Earnings per share were $2.00 both basic and diluted. The company maintained a solid balance sheet with $990.5 million in total assets, including $237.4 million in cash and cash equivalents, while managing $719.9 million in total liabilities.
Revenue of $492.5 million was generated primarily from cloud-hosted software subscriptions, with additional revenue from term-license arrangements. The company operates a land-and-expand business model that drives viral adoption and expansion across teams and use cases. During fiscal 2026, PagerDuty introduced more flexible pricing options, including usage-based pricing models that align customer investments to business outcomes. International operations contributed 29% of total revenue, demonstrating the company's global reach beyond North America. The company serves nearly half of the Fortune 500, half of the Forbes AI 50, and approximately two-thirds of the Fortune 100, with enterprise customers representing the majority of revenue.
Gross margin remained strong at 85.0%, with cost of revenue at $74.1 million representing only 15.0% of total revenue. Operating expenses totaled $412.6 million, comprising research and development ($126.9 million), sales and marketing ($184.0 million), and general and administrative ($101.6 million). Operating margin was 1.2%, reflecting the company's transition to profitability. The significant tax benefit of $152.5 million substantially boosted net income margins. Stock-based compensation was $97.8 million, representing a substantial non-cash expense that impacted operating results. The company's focus on enterprise customers and platform adoption supports margin sustainability.
Operating cash flow was robust at $114.9 million, driven by net income of $172.7 million adjusted for non-cash items including $97.8 million in stock-based compensation and $13.1 million in depreciation and amortization. Investing activities used $18.3 million primarily for capitalized software costs ($9.2 million) and property and equipment purchases ($2.9 million). Financing activities used $206.4 million, with significant outflows for common stock repurchases ($134.9 million), convertible senior note repayments ($57.5 million), and employee payroll taxes paid ($24.8 million). Free cash flow (operating cash flow minus capital expenditures) was $96.6 million. The balance sheet shows total assets of $990.5 million with current assets of $612.2 million, including $237.4 million in cash and $232.4 million in investments. Total liabilities were $719.9 million, with $395.7 million in convertible senior notes as the largest component.
The company continues to focus on growth strategies including acquiring new customers, expanding usage within existing customer bases, introducing new products and pricing models, growing international presence, and expanding U.S. public sector presence following FedRAMP authorization in March 2025. PagerDuty faces competition from multi-product ITSM vendors, pure-play incident management vendors, and adjacent vendors expanding into incident management. The company experiences seasonality with the first fiscal quarter typically being the lowest billings and bookings quarter due to customer procurement cycles. Regulatory compliance remains important, particularly regarding data privacy, security, artificial intelligence, and federal acquisition regulations. The company has 31 issued patents and 51 pending applications, with issued patents expected to expire between 2033 and 2044.