Research Reports

Revenue: $123M, +6% YoY (prepared).
Annual Recurring Revenue (ARR): $499M, +5% YoY (prepared).
Dollar-Based Net Retention (DBNR): 102%, down from 104% in Q1, impacted by downgrades (prepared).
High-Value Customers (>$100K ARR): 868, +20 sequentially, +48 YoY (prepared).
Total Paid Customers: 15,302, +75 net new in Q2 (prepared).
International Revenue: +12% YoY, contributed 29% of total revenue (prepared).
Non-GAAP Gross Margin: 86%, at high end of 84%-86% target range (prepared).
Non-GAAP Operating Margin: 25%, +800 bps YoY (prepared).
Free Cash Flow (FCF): $30M, or 24% of revenue (prepared).
Cash from Operations: $34M, or 28% of revenue (prepared).
Total RPO: ~$425M, +5% YoY; ~$295M (69%) expected over next 12 months (prepared).
Trailing 12-Month Billings: $496M, +6% YoY (prepared).
Share Repurchase Authorization: Expanded to $200M (prepared).
Usage Growth: Platform usage grew >25% YoY (prepared).
AI Ops Usage-Based Growth: >60% (prepared).
Native AI Companies: Contribute 2% of total ARR, growing rapidly (prepared).

Official Guidance:

Q3 FY2026: Revenue $124M–$126M (4%-6% growth); non-GAAP net income per diluted share $0.24–$0.25; operating margin 21% (prepared).
Full Year FY2026: Revenue $493M–$497M (5%-6% growth); non-GAAP net income per diluted share $1.00–$1.04; operating margin 21%-22% (prepared).

Mgmt Quotes:

"We achieved GAAP profitability for the first time in our company's history while our non-GAAP operating margin reached 25%, exceeding both guidance and year-over-year expansion by 800 points." (CEO)
"Platform usage growth in both volume and use case diversity demonstrates that the work itself is mission-critical for enterprise operations." (CEO)
"We are becoming the central nervous system for the AI-native ecosystem." (CEO)
"We expect dollar-based net retention to remain at this level in the second half as our pricing and packaging become better aligned with customer value realization." (CFO)
"We remain focused on the path to accelerating ARR growth, confident in continuing to expand margins, and achieve GAAP profitability in FY 2027." (CFO)

Metric	Value	Speaker/Context
Revenue	$123M	Q2 FY2026, +6% YoY (prepared)
ARR	$499M	Exiting Q2, +5% YoY (prepared)
DBNR	102%	Q2 FY2026 (prepared)
Non-GAAP Gross Margin	86%	Q2 FY2026 (prepared)
Non-GAAP Operating Margin	25%	Q2 FY2026 (prepared)
Free Cash Flow	$30M	Q2 FY2026, 24% of revenue (prepared)
Cash from Operations	$34M	Q2 FY2026, 28% of revenue (prepared)
Total RPO	~$425M	End of Q2, +5% YoY (prepared)
Trailing 12-Month Billings	$496M	+6% YoY (prepared)
High-Value Customers (>$100K ARR)	868	End of Q2, +20 sequentially (prepared)
Total Paid Customers	15,302	End of Q2, +75 net new (prepared)
Cash, Cash Equivalents, and Investments	$568M	End of Q2 (prepared)

Topic: Business recovery, new logo growth, and new CRO priorities
Key points:
- New and expansion revenue up 15% sequentially in Q2; new customer logos more than 3x the full-year FY2025 total (halfway through FY2026).
- Platform usage (event flows, automated incident workflows) growing >25%, in some cases >100%; retention pressure mainly from seat-based optimization downgrades, not customer churn.
- New CRO (Todd) starts later this month; priorities: enterprise transformation, retention, and go-to-market for four new AI agents plus PagerDuty Advance (GA this quarter).
Mgmt stance: Bullish — sees path to reaccelerating growth in FY2027 via usage-based pricing alignment and enterprise transition.

Topic: Enterprise shift, ARR quality, and billings acceleration
Key points:
- 75% of ARR from enterprise companies (revenue >$500M); >65% of ARR from customers with 2+ products; ~70% of ARR from incident management.
- Multi-year contracts improving; 5% of revenue was multiyear this quarter.
- Trailing twelve-month billings expected to accelerate to ~7% in back half; incremental ARR in H2 expected significantly higher than H1; Q4 is largest billings quarter due to renewals.
Mgmt stance: Bullish — confident in billings acceleration driven by enterprise transition and seasonality.