Cloud software provider PagerDuty Inc. (NYSE: PD) released its second-quarter report last week. The company beat Wall Street predictions in terms of revenue and earnings, causing share prices to spike.
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PagerDuty makes cloud-based software that detects disruptions and other problems in IT infrastructure. The company has increased its client base to 18,000 companies over the past quarter. Additionally, existing customers are beginning to purchase more PagerDuty services, increasing their spending on the software.
As a result, revenues grew 33 percent year over year to $67.5 million, the fastest growth in the last five quarters. Growth in revenue was driven by a growing demand for new automation solutions as well as a comprehensive digital operations plan, especially from midsize and large businesses.
Today, PagerDuty has loyal customers at large companies such as Autodesk, Nvidia, and Anheuser-Busch. Retention of net customers has increased by 126 percent in dollar terms, meaning existing customers have increased their revenue by 26 percent as they use more of the company’s services. New customers have also joined PagerDuty, including Citigroup and Mattress Firm.
As PagerDuty expands its customer base, it needs to spend more on sales and marketing, which resulted in a decline of nearly 87 % in gross profit, while its adjusted operating loss increased from $3.2 million to $9.9 million.
PagerDuty predicts revenue growth of 28 – 32% for the third quarter with a range of $69 million to $71 million in revenue for the full year reaching $273 – $276 million, or approximately a 30% increase year over year.