PagerDuty, Inc.

Previous wording

We generate revenue primarily from cloud-hosted software subscription fees. We also generate revenue from term-license software subscription fees. Our subscriptions are typically one year in duration but can range from monthly to multi-year. Subscription fees are driven primarily by the number of customers, the number of users per customer, and the level of subscription purchased. We generally invoice customers in advance in annual installments for subscriptions to our software. Revenue related to our cloud-hosted software subscriptions is recognized ratably over the related contractual term beginning on the date that our platform is made available to a customer. For our term-license software subscriptions, we recognize license revenue upon delivery, and software maintenance revenue ratably, typically beginning on the start of the contractual term of the arrangement.

Current wording

We generate revenue primarily from cloud-hosted software subscription fees. We also generate revenue from term-license software subscription fees. Revenue generated from term-license software subscription fees is not material. Our subscriptions are typically one year in duration but can range from monthly to multi-year. Subscription fees are driven primarily by the number of customers, the number of users per customer, and the level of subscription purchased. We generally invoice customers in advance in annual installments for subscriptions to our software. Revenue related to our cloud-hosted software subscriptions is recognized ratably over the related contractual term beginning on the date that our platform is made available to a customer. For our term-license software subscriptions, we recognize license revenue upon delivery, and software maintenance revenue ratably, typically beginning on the start of the contractual term of the arrangement.

Previous wording

Due to the low complexity of implementation and integration of our platform with our customers’ existing infrastructure, revenue from professional services has been immaterial to date.

Current wording

Due to the low complexity of implementation and integration of our platform with our customers’ existing infrastructure, revenue from professional services has not been material to date.

Previous wording

Interest expense: Interest expense consists primarily of contractual interest expense and amortization of debt issuance costs on our 1.25% Convertible senior notes due 2025 (the “2025 Notes”) that were partially extinguished in October 2023 and the contractual interest expense and amortization of debt issuance costs on our 1.50% Convertible Senior Notes due 2028 (the “2028 Notes”) that were issued in October 2023.

Current wording

Interest expense: Interest expense consists primarily of contractual interest expense and amortization of debt issuance costs on our 1.25% Convertible senior notes due 2025 (the “2025 Notes”) that were repaid during the three months ended July 31, 2025 and the contractual interest expense and amortization of debt issuance costs on our 1.50% Convertible Senior Notes due 2028 (the “2028 Notes”) that were issued in October 2023.

Previous wording

Interest expense increased primarily due to an increase in interest expense related to the Convertible Notes.

Current wording

Interest expense decreased primarily due to an decrease in interest expense related to the Convertible Notes, driven by the repayment of the 2025 Notes during the three months ended July 31, 2025.

Previous wording

Other income (expense), net: Other income (expense), net primarily consists of foreign currency transaction gains and losses.

Current wording

Other income, net: Other income, net primarily consists of foreign currency transaction gains and losses.

Previous wording

Provision for (benefit from) income taxes: Provision for (benefit from) income taxes consists primarily of income taxes in certain foreign and U.S. jurisdictions in which we conduct business. We maintain a full valuation allowance on our net federal and state deferred tax assets as we have concluded that it is more likely than not that the deferred tax assets will not be realized for all years presented.

Current wording

(Benefit from) provision for income taxes: (Benefit from) provision for income taxes consists primarily of income taxes in certain foreign and U.S. jurisdictions in which we conduct business. We maintain a full valuation allowance on our net federal and state deferred tax assets as we have concluded that it is more likely than not that the deferred tax assets will not be realized for all years presented.

Previous wording

The change in provision for (benefit from) income taxes was primarily driven by foreign, federal, and state income taxes. The provision may fluctuate to the extent the mix of earnings fluctuates between jurisdictions with different tax rates.

Current wording

The change in (benefit from) provision for income taxes was primarily driven by foreign, federal, and state income taxes. The provision may fluctuate to the extent the mix of earnings fluctuates between jurisdictions with different tax rates.

Previous wording

The decrease in cost of revenue is primarily due to: (i) a decrease of $1.1 million in amortization of acquired intangible assets; and (ii) a decrease of $0.5 million in outside services spend for the customer service team; offset by (iii) an increase of $0.6 million in personnel costs as a result of an increase in headcount; (iv) an increase of $0.4 million in costs to support the business and related infrastructure, which include allocated overhead costs; (v) an increase of $0.3 million in other expenses, which primarily consisted of merchant fees; and (vi) an increase of $0.2 million in amortization of capitalized software.

Current wording

The decrease in cost of revenue is primarily due to: (i) a decrease of $2.8 million in amortization of acquired intangible assets; and (ii) a decrease of $1.6 million in outside services spend for the customer service team; offset by (iii) an increase of $1.2 million in personnel costs as a result of an increase in headcount; (iv) an increase of $0.9 million in hosting, software, and telecom costs; (v) an increase of $0.5 million in costs to support the business and related infrastructure, which include allocated overhead costs; and (vi) an increase of $0.3 million in amortization of capitalized software.

Previous wording

Research and development expenses decreased primarily due to: (i) a decrease of $3.0 million in personnel costs as a result of a decrease in headcount and a decrease in stock-based compensation; and (ii) a decrease of $0.5 million in costs to support the business and related infrastructure, which include allocated overhead costs.

Current wording

Research and development: Research and development expenses decreased primarily due to: (i) a decrease of $7.1 million in personnel costs as a result of a decrease in headcount and a decrease in stock-based compensation; and (ii) a decrease of $0.9 million in costs to support the business and related infrastructure, which include allocated overhead costs; offset by (iii) an increase of $0.4 million in training and travel-related costs.

Previous wording

Sales and marketing expenses increased primarily due to: (i) an increase of $2.5 million in marketing costs for media campaigns during the current period; (ii) an increase of $0.8 million in personnel costs primarily due to severance costs that occurred during the current period; and (iii) an increase of $0.5 million in costs to support the business and related infrastructure, which include allocated overhead costs; offset by (iv) a decrease of $2.2 million in outside services spend due to higher leverage of internal resources.

Current wording

Sales and marketing: Sales and marketing expenses decreased primarily due to: (i) a decrease of $4.0 million in outside services spend due to higher leverage of internal resources; (ii) a decrease of $2.3 million in personnel costs primarily due to a decrease in stock-based compensation; (iii) a decrease of $1.3 million in training and travel-related costs; offset by (iv) an increase of $2.0 million in marketing costs for media campaigns during the current period; and (v) an increase of $0.8 million in costs to support the business and related infrastructure, which include allocated overhead costs.

Previous wording

We define non-GAAP gross profit as gross profit excluding the following expenses typically included in cost of revenue: stock-based compensation expense, employer taxes related to employee stock transactions, and amortization of acquired intangible assets. We define non-GAAP gross margin as non-GAAP gross profit as a percentage of revenue.

Current wording

We define non-GAAP gross profit as gross profit excluding the following expenses typically included in cost of revenue: stock-based compensation expense, employer taxes related to employee stock transactions, amortization of acquired intangible assets, and restructuring costs. We define non-GAAP gross margin as non-GAAP gross profit as a percentage of revenue.

Previous wording

We define non-GAAP net income attributable to PagerDuty, Inc. common stockholders as net loss attributable to PagerDuty, Inc. common stockholders excluding stock-based compensation expense, employer taxes related to employee stock transactions, amortization of debt issuance costs, amortization of acquired intangible assets, acquisition-related expenses, which include transaction costs, acquisition-related retention payments and asset impairment, restructuring costs, shareholder matters, adjustment attributable to redeemable non-controlling interest, and income tax adjustments, which are not necessarily reflective of operational performance during a given period.

Current wording

We define non-GAAP net income attributable to PagerDuty, Inc. common stockholders as net income (loss) attributable to PagerDuty, Inc. common stockholders excluding stock-based compensation expense, employer taxes related to employee stock transactions, amortization of debt issuance costs, amortization of acquired intangible assets, acquisition-related expenses, which include transaction costs, acquisition-related retention payments and asset impairment, restructuring costs, shareholder matters, adjustment attributable to redeemable non-controlling interest, and income tax adjustments, which are not necessarily reflective of operational performance during a given period.

Previous wording

As of April 30, 2025, our principal sources of liquidity were cash and cash equivalents and investments totaling $597.1 million. We believe that our existing cash and cash equivalents, investments, and net cash generated from our operating activities will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. Since inception, we have financed operations primarily through sales of our cloud-hosted software subscriptions, net proceeds received from sales of equity securities, and the issuance of our 2025 Notes and 2028 Notes. We believe we will meet long-term expected future cash requirements and obligations through a combination of cash flows from operating activities and available cash and short-term investment balances.

Current wording

As of July 31, 2025, our principal sources of liquidity were cash and cash equivalents and investments totaling $567.9 million. We believe that our existing cash and cash equivalents, investments, and net cash generated from our operating activities will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. Since inception, we have financed operations primarily through sales of our cloud-hosted software subscriptions, net proceeds received from sales of equity securities, and the issuance of our 2028 Notes. We believe we will meet long-term expected future cash requirements and obligations through a combination of cash flows from operating activities and available cash and short-term investment balances.

Previous wording

Refer to Note 9. Debt and Financing Arrangements, in the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for discussion of our debt arrangements, including the timing of expected maturity of such arrangements. The $57.5 million principal of our 2025 Notes is short-term in nature and will be repaid by us in cash at maturity during the three months ending July 31, 2025.

Current wording

Refer to Note 9. Debt and Financing Arrangements, in the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for discussion of our debt arrangements, including the timing of expected maturity of such arrangements. The $57.5 million principal of our 2025 Notes was repaid by us in cash at maturity during the three months ended July 31, 2025.

Previous wording

A significant majority of our customers pay in advance for our cloud-hosted and term-license software subscriptions. Therefore, a substantial source of our cash is from our deferred revenue, which is included in the liabilities section of our condensed consolidated balance sheet. Deferred revenue consists of the unearned portion of customer billings, which is recognized as revenue in accordance with our revenue recognition policy. As of April 30, 2025, we had deferred revenue of $239.7 million, of which $237.1 million was recorded as a current liability and expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria are met.

Current wording

A significant majority of our customers pay in advance for our cloud-hosted and term-license software subscriptions. Therefore, a substantial source of our cash is from our deferred revenue, which is included in the liabilities section of our condensed consolidated balance sheet. Deferred revenue consists of the unearned portion of customer billings, which is recognized as revenue in accordance with our revenue recognition policy. As of July 31, 2025, we had deferred revenue of $229.9 million, of which $227.0 million was recorded as a current liability and expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria are met.

Previous wording

The 2025 Share Repurchase Program replaces the share repurchase program approved by our Board of Directors in May 2024 (the “2024 Share Repurchase Program”) for the repurchase of shares of our common stock in an aggregate amount of up to $100.0 million. The 2024 Share Repurchase Program did not obligate us to acquire a specified number of shares, and could be suspended, modified, or terminated at any time, without prior notice. During the year ended January 31, 2025, the Company repurchased a total of 5,223,071 shares of common stock under the 2024 Share Repurchase Program through open market purchases, including through 10b5-1 plans, at an average per share price of $19.15 for a total repurchase price of $100.0 million. During the year ended January 31, 2025, these shares were retired.

Current wording

The 2025 Share Repurchase Program replaces the share repurchase program approved by our Board of Directors in May 2024 (the “2024 Share Repurchase Program”) for the repurchase of shares of our common stock in an aggregate amount of up to $100.0 million. The 2024 Share Repurchase Program did not obligate us to acquire a specified number of shares, and could be suspended, modified, or terminated at any time, without prior notice. Under the 2024 Share Repurchase Program, the Company repurchased a total of 5,223,071 shares of common stock through open market purchases, including through 10b5-1 plans, at an average per share price of $19.15 for a total repurchase price of $100.0 million. During the year ended January 31, 2025, these shares were retired.

Previous wording

Our estimated future obligations as of April 30, 2025 include both current and long-term obligations. Our debt obligations total $451.4 million, of which $57.5 million is short-term, and the remainder is long-term. Additionally, we had $1.8 million of irrevocable standby letters of credit outstanding which were fully collateralized by our restricted cash, all of which represents a long-term cash obligation. Under our operating leases, we had a current obligation of $3.6 million and a long-term obligation of $8.7 million. Operating lease obligations primarily represent the initial contracted term for leases that have commenced as of April 30, 2025, not including any future optional renewal periods.

Current wording

Our estimated future obligations as of July 31, 2025 include both current and long-term obligations. Our debt obligations total $394.5 million, all of which is long-term. Additionally, we had $1.4 million of irrevocable standby letters of credit outstanding which were fully collateralized by our restricted cash, all of which represents a long-term cash obligation. Under our operating leases, we had a current obligation of $3.6 million and a long-term obligation of $10.2 million. Operating lease obligations primarily represent the initial contracted term for leases that have commenced as of July 31, 2025, not including any future optional renewal periods.

Previous wording

Our changes in cash can be impacted by the effect of fluctuating exchange rates. Foreign exchange had a negative effect on cash in the three months ended April 30, 2024, decreasing our total cash balance by $0.1 million as of April 30, 2024, and a positive effect on cash in the three months ended April 30, 2025, increasing our total cash balance by $0.3 million as of April 30, 2025.

Current wording

Our changes in cash can be impacted by the effect of fluctuating exchange rates. Foreign exchange had a negative effect on cash in the six months ended July 31, 2024, decreasing our total cash balance by $23.0 thousand as of July 31, 2024, and a positive effect on cash in the six months ended July 31, 2025, increasing our total cash balance by $0.1 million as of July 31, 2025.

Previous wording

Net cash provided by operating activities improved, primarily due to improvements in our operating loss performance due to the 7.8% increase in revenue. Cash provided by operating activities is subject to variability period-over-period as a result of timing differences, including with respect to the collection of receivables and payments of accounts payable, and other items.

Current wording

Net cash provided by operating activities improved, primarily due to improvements in our operating loss performance due to the 7.1% increase in revenue, along with our 6.1% decrease in operating expenses. Cash provided by operating activities is subject to variability period-over-period as a result of timing differences, including with respect to the collection of receivables and payments of accounts payable, and other items.

Previous wording

Net cash used in investing activities decreased, primarily due to a decrease in purchases of available-for-sale investments, offset by a decrease in proceeds from maturities of available-for-sale investments and proceeds from sales of available-for-sale investments.

Current wording

Net cash used in investing activities increased, primarily due to a decrease in purchases of available-for-sale investments, offset by a decrease in proceeds from maturities of available-for-sale investments and proceeds from sales of available-for-sale investments, along with an increase in capitalized software costs and an increase in purchases of non-marketable equity investments.

Previous wording

We had $1.8 million of irrevocable standby letters of credit outstanding as of April 30, 2025. Letters of credit are primarily used as a form of security deposits for the spaces we lease.

Current wording

We had $1.4 million of irrevocable standby letters of credit outstanding as of July 31, 2025. Letters of credit are primarily used as a form of security deposits for the spaces we lease.