PagerDuty (PD) Q4 2025 Earnings Call March 13, 2025 05:00 PM ET Company Participants Tony Righetti - VP - Investor RelationsJennifer Tejada - Chief Executive OfficerHoward Wilson - CFOKoji Ikeda - Director - Enterprise Software Equity ResearchSanjit Singh - Executive DirectorPinjalim Bora - Executive DirectorNick Altmann - Director - U.S. Software Equity Research Conference Call Participants Andrew Sherman - AnalystKingsley Crane - Director, Senior AnalystJeff Van Rhee - Partner & Senior Analyst - Equity Re ...

Revenue Growth - Fourth quarter revenue increased 9.3% year over year to $121 million[1] - Annual recurring revenue (ARR) grew 9% year over year to $494 million as of January 31, 2025[7] - Total revenue for the full fiscal year 2025 was $467.5 million, an increase of 8.5% year over year[5] - Revenue for the three months ended January 31, 2025, was $121,446 thousand, representing a 9.9% increase from $111,117 thousand in the same period of 2024[19] - Total revenue for the year ended January 31, 2025, was $467,499,000, compared to $430,699,000 in 2024, marking an increase of 8.5%[45] Profitability Metrics - Non-GAAP operating income for the fourth quarter was $22.3 million, with a non-GAAP operating margin of 18.3%[5] - Non-GAAP operating income for the year ended January 31, 2025, was $82.703 million, up from $56.391 million in 2024, reflecting a 46.6% year-over-year growth[50] - Non-GAAP net income attributable to common stockholders for the year ended January 31, 2025, was $80.380 million, an increase from $72.554 million in 2024[50] - Non-GAAP net income per share, basic, for the year ended January 31, 2025, was $0.87, up from $0.79 in 2024[50] - Non-GAAP gross margin for the year ended January 31, 2025, was 86.2%, up from 85.8% in 2024, indicating a slight improvement in profitability[45] Cash Flow and Expenses - Free cash flow for the fourth quarter was $28.6 million, with net cash provided by operating activities of $31.4 million[5] - Free cash flow for the three months ended January 31, 2025, was $28.590 million, compared to $19.612 million in the same period of 2024, indicating a 45.9% increase[50] - Net cash provided by operating activities for the year ended January 31, 2025, was $117,891 thousand, compared to $71,974 thousand in 2024, an increase of 63.8%[23] - Free cash flow margin for the year ended January 31, 2025, was not provided but is calculated as free cash flow as a percentage of revenue, which is a key liquidity measure[41] - The company reported a free cash flow margin of 23.2% for the year ended January 31, 2025, compared to 15.0% in 2024[50] Shareholder Returns - The company announced a new share repurchase program for up to $150 million of common stock[2] Customer Metrics - Customers with ARR over $100 thousand increased by 6% to 849[7] - The dollar-based net retention rate was 106% as of January 31, 2025[7] Operating Expenses - Total operating expenses decreased to $113,191 thousand for the three months ended January 31, 2025, from $124,190 thousand in the same period of 2024, a reduction of 8.1%[19] - Non-GAAP operating expenses for research and development for the year ended January 31, 2025, were $94,164,000, compared to $92,409,000 in 2024, reflecting a 1.9% increase[45] - Non-GAAP sales and marketing expenses for the year ended January 31, 2025, were $167,193,000, compared to $163,095,000 in 2024, showing a 2.5% increase[45] Net Loss and Improvement - Net loss attributable to PagerDuty, Inc. common stockholders for the three months ended January 31, 2025, was $10,604 thousand, compared to a loss of $30,632 thousand in the same period of 2024, showing a significant improvement[19] - The company reported a net loss attributable to common stockholders of $10.604 million for the three months ended January 31, 2025, compared to a loss of $30.632 million in the same period of 2024[50] Future Projections - The company expects total revenue for the first quarter of fiscal 2026 to be between $118 million and $120 million, representing a growth rate of 6% to 8% year over year[12] - Non-GAAP net income per diluted share for the full fiscal year 2026 is expected to be between $0.90 and $0.95[12] - The projected non-GAAP tax rate for fiscal 2026 is set at 22%, down from 23% in fiscal 2025, aimed at providing better consistency across reporting periods[35]

Core Points - Precision Drilling Corporation has filed its annual disclosure documents with Canadian securities commissions and the U.S. SEC [1] - The 2024 Annual Report includes audited consolidated financial statements and management's discussion for the year ended December 31, 2024, with financial results previously released on February 12, 2025 [2] - The Annual Report and Annual Information Form are available on SEDAR+ and EDGAR systems, as well as on Precision's website [3] - The 2025 Annual and Special Meeting of Shareholders will be held virtually on May 15, 2025 [4] Company Overview - Precision is a leading provider of safe and environmentally responsible services to the energy industry, offering access to a fleet of Super Series drilling rigs [5] - The company has developed a digital technology portfolio known as Alpha, which utilizes advanced automation software and analytics for efficient results [5] - Precision also provides environmental solutions through its EverGreen suite, along with well service rigs, camps, and rental equipment supported by technical services and experienced personnel [5] - The company is headquartered in Calgary, Alberta, Canada, and is listed on the Toronto Stock Exchange as "PD" and the New York Stock Exchange as "PDS" [6]

Core Viewpoint - The company demonstrated resilience in the market despite challenges in U.S. customer demand and budget exhaustion in Canada, achieving significant debt reduction and shareholder returns while investing in core business lines [4][6][12]. Financial Highlights - Revenue for Q4 2024 was $468 million, an 8% decrease from Q4 2023, primarily due to lower U.S. activity and day rates [6][19]. - Adjusted EBITDA for Q4 2024 was $121 million, down 20.3% from $151 million in Q4 2023 [6][19]. - Net earnings attributable to shareholders in Q4 2024 were $15 million, a significant drop of 89.8% compared to $147 million in Q4 2023 [6][19]. - For the year ended December 31, 2024, revenue was $1.902 billion, a slight decrease of 1.8% from 2023 [14][21]. Operational Highlights - Canadian drilling rig utilization days increased by 12% in 2024, while international drilling rig utilization days rose by 37% [8][9]. - The company maintained a consistent contract drilling rig fleet of 214 rigs throughout 2024 [16][34]. - Service rig operating hours increased by 26% year-over-year, reflecting successful integration of acquisitions [10][39]. Capital Allocation and Debt Management - The company reduced debt by $176 million in 2024 and plans to reduce it by at least $100 million in 2025, with a long-term target of $700 million by 2027 [12][25]. - Shareholder returns were increased to 35% to 45% of free cash flow before debt repayments in 2025 [12][26]. - Capital expenditures for 2024 were $217 million, with plans to invest approximately $225 million in 2025 [11][21]. Market Outlook - The outlook for Canadian drilling remains strong due to robust heavy oil activity and the startup of the Trans Mountain pipeline expansion [5][24]. - In the U.S., drilling activity is expected to improve in the second half of 2025 as new LNG export capacity is added [29][27]. - Internationally, the company has secured long-term contracts, providing predictable cash flow through 2027 and 2028 [9][30].

Core Viewpoint - PagerDuty (PD) has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which significantly influences stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based solely on a company's changing earnings picture, with the Zacks Consensus Estimate tracking EPS estimates from sell-side analysts [1][2]. - Changes in future earnings potential, reflected in earnings estimate revisions, are strongly correlated with near-term stock price movements, influenced by institutional investors [4][6]. PagerDuty's Earnings Outlook - For the fiscal year ending January 2025, PagerDuty is expected to earn $0.79 per share, representing a 6.8% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for PagerDuty has increased by 26%, indicating a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of PagerDuty to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting potential for higher stock prices in the near term [10].

Debt Repayment and Liquidity - Precision reduced debt by $176 million in 2024, achieving the mid-point of its debt reduction target range [3] - The company ended 2024 with a cash balance of approximately $74 million, compared to $54 million at year-end 2023 [3] - Total available liquidity at year-end 2024 was approximately $575 million [3] Capital Allocation and Shareholder Returns - Precision remains committed to its long-term debt reduction target of repaying $600 million between 2022 and 2026 [4] - The company returned $75 million to shareholders through share repurchases in 2024, reducing outstanding shares by 4% to 13,779,502 [5] - Since 2015, Precision has allocated $1.5 billion of free cash flow to debt repayments and share buybacks [6] - Annual interest expense decreased to approximately $40 million in 2024 from $104 million in 2016 [6] Financial and Operational Performance - Precision expects to release 2024 fourth quarter results on February 12, 2025, with drilling field margins in Canada and the U.S. aligning with previous guidance [8] - Share-based compensation expense for Q4 2024 is expected to be approximately $15 million, with full-year expense at $47 million [8] - In Canada, Precision maintained an average active rig count of 65 in Q4 2024, with current active rigs at 78 and expected to peak in the low to mid-80s during winter [9] - In the U.S., Precision averaged 34 rigs in Q4 2024, with 32 rigs currently operating and four earning standby revenue [11] - Internationally, Precision has eight active rigs under long-term contracts extending into 2028, with three in Saudi Arabia and five in Kuwait [12] Future Outlook and Strategy - Precision plans to further reduce debt and increase share buyback allocation in 2025, with specific capital allocation plans to be provided in February 2025 [7] - The company expects continued high activity levels for its Well Service business, with 85 to 100 crews projected to be operational in early January 2025 [12] - Precision's CFO highlighted the company's robust free cash flow generation in 2024, driven by increased activity in Canada, international growth, and the integration of CWC Energy Services [13] Company Overview - Precision is a leading provider of drilling services, offering an extensive fleet of Super Series drilling rigs and industry-leading digital technology portfolio known as Alpha [14] - The company's EverGreen suite of environmental solutions enhances its commitment to reducing environmental impact [14] - Precision also offers well service rigs, camps, rental equipment, and technical support services [14]

Core Viewpoint - PagerDuty (PD) has underperformed in the market, with a 15.7% decline year-to-date, contrasting with the Zacks Internet - Software industry's increase of 38.3% and the broader Zacks Computer & Technology sector's return of 35.5% [1] Group 1: Performance and Market Position - The underperformance is linked to ongoing weakness in the Small and Medium-sized Business segment and a challenging macroeconomic environment affecting the Enterprise segment, resulting in longer sales cycles [2] - PD's customer base is expanding, with a notable increase in high-value customers, specifically those spending over $100,000 in Annual Recurring Revenue (ARR), which rose to 825 in Q3 2024, marking a 6% increase year-over-year [3] Group 2: Innovations and Growth Drivers - Growing demand for automation and generative AI has significantly driven PagerDuty's growth, leading to the introduction of AI-driven solutions like PagerDuty Advance in Q3 2024, aimed at improving incident management and response times [4] - The company's AIOps and Automation capabilities contributed over 40% of its net new ARR in Q3 2024, indicating a strong demand for advanced IT operations tools [6] Group 3: Strategic Partnerships - PagerDuty's partnerships with key industry players such as Amazon and Snowflake have bolstered its clientele, with new generative AI and automation features integrated with Amazon Web Services tools to enhance operational efficiency [7][8] Group 4: Financial Guidance - For Q4 2024, PagerDuty anticipates revenues between $118.5 million and $120.5 million, with non-GAAP earnings expected in the range of 15-16 cents per share, reflecting a year-over-year revenue increase of 7.5% [9] - For fiscal 2024, the revenue guidance is set between $464.5 million and $466.5 million, representing an 8% year-over-year growth, with non-GAAP earnings projected at 78-79 cents per share [11] Group 5: Valuation and Investment Potential - PagerDuty's stock is currently viewed as having a stretched valuation, with a Price/Book ratio of 15.83X compared to the industry average of 3.78X, indicating it is not cheap [14] - Despite the valuation concerns, the robust AI portfolio and expanding partner base present attractive investment opportunities, supported by a Zacks Rank 2 (Buy) and a Growth Score of A [15]

Group 1 - The article highlights potential investment opportunities in lagging companies, specifically mentioning PagerDuty as a candidate for growth in 2025 [1] - The author emphasizes the importance of conducting thorough due diligence before making investment decisions [3][4] - The article reflects a personal interest in the markets and investment management, indicating a focus on long/short equities [1] Group 2 - There is no disclosure of any current stock or derivative positions in the companies mentioned, nor plans to initiate such positions in the near future [2] - The article is presented as a personal opinion without any compensation from the companies discussed [2]

We believe that cybersecurity is poised to become one of the biggest, most crucial industries globally over the next few decades, especially with the exponential rise in AI-assisted technology adoption and digital transitions across most industries coupledStock analysis brought to you by Jacques Georget. The analysis is based on a careful review of the growth prospects of each company. For valuation purposes, I often use the Discounted Cash Flow (DCF) model, sharing valuable insight on cash flow generation ...

PagerDuty (PD) reported $118.95 million in revenue for the quarter ended October 2024, representing a year-over-year increase of 9.4%. EPS of $0.25 for the same period compares to $0.20 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $116.5 million, representing a surprise of +2.10%. The company delivered an EPS surprise of +56.25%, with the consensus EPS estimate being $0.16.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Str ...