PagerDuty, Inc.

Previous wording

In today's environment, every business is fundamentally a digital business. Whether in retail, financial services, healthcare, telecommunications, or supply chain logistics, modern commerce depends on increasingly complex networks of digital infrastructure, cloud services, applications, and distributed teams that operate in an always-on world. This complexity continues to accelerate as organizations adopt AI-driven systems and integrate artificial intelligence across their operations.

Current wording

In today's environment, every business is fundamentally a digital business. Whether in retail, financial services, healthcare, telecommunications, or supply chain logistics, modern commerce depends on increasingly complex networks of digital infrastructure, cloud services, applications, and distributed teams that operate in an always-on world. This complexity continues to accelerate as organizations adopt AI-driven systems and integrate AI across their operations.

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, which include platform subscriptions and credit packs for flexible platform capacity. 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, and committed platform capacity. 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

Interest income decreased primarily due to a decrease in interest rates year-over-year.

Current wording

Interest income decreased primarily due to a lower cash and cash equivalents balance and lower interest rates year-over-year.

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 repaid during the year ended January 31, 2026 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 decreased primarily due to a decrease in interest expense related to our convertible notes, driven by the repayment of the 2025 Notes during the year ended January 31, 2026 .

Current wording

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

Previous wording

Provision for income taxes: Provision for income taxes consists primarily of income taxes in certain foreign and U.S. jurisdictions in which we conduct business.

Current 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.

Previous wording

The change in provision for income taxes is primarily attributable to an increase in pre-tax income, as well as tax deficiencies from stock-based compensation.

Current wording

The change in provision for (benefit from) income taxes is primarily attributable to an increase in pre-tax income, as well as tax deficiencies from stock-based compensation.

Previous wording

The decrease in cost of revenue is primarily due to: (i) a decrease of $1.0 million in amortization of acquired intangible assets; (ii) a decrease of $0.6 million in outside services spend for the customer service team; (iii) a decrease of $0.4 million in merchant fees; and (iv) a decrease of $0.1 million in training and travel-related costs; offset by (v) an increase of $1.2 million in hosting, software, and telecom costs; (vi) an increase of $0.4 million in personnel costs, primarily related to increases in commissions and bonuses; (vii) an increase of $0.3 million in costs to support the business and related infrastructure, which include allocated overhead costs; and (viii) an increase of $0.1 million in amortization of capitalized software.

Current wording

Cost of revenue increased primarily due to: (i) an increase of $1.4 million in hosting, software, and telecom costs; (ii) an increase of $1.0 million in costs to support the business and related infrastructure, which include allocated overhead costs; (iii) an increase of $0.8 million in personnel costs, primarily related to increases in commissions and bonuses; offset by (iv) a decrease of $1.2 million in amortization of acquired intangible assets; (v) a decrease of $0.5 million in merchant fees and (vi) a decrease of $0.5 million in outside services spend.

Previous wording

Research and development expenses decreased primarily due to: (i) a decrease of $5.4 million in personnel costs primarily as a result of a decrease in stock-based compensation; offset by (ii) an increase of $1.1 million in costs to support the business and related infrastructure, which include allocated overhead costs; and (iii) an increase of $0.4 million in outside services spend.

Current wording

Research and development expenses decreased primarily due to: (i) a decrease of $7.4 million in personnel costs primarily as a result of a decrease in stock-based compensation; offset by (ii) an increase of $2.8 million in costs to support the business and related infrastructure, which include allocated overhead costs; and (iii) an increase of $0.9 million in outside services spend.

Previous wording

Sales and marketing expenses decreased primarily due to: (i) a decrease of $6.9 million in personnel costs, driven largely by a decrease in headcount and a decrease in stock-based compensation; (ii) a decrease of $1.2 million in training and travel-related costs; (iii) a decrease of $1.0 million in marketing costs for media campaigns; (iv) a decrease of $0.5 million in costs to support the business and related infrastructure, which include allocated overhead costs; and (v) a decrease of $0.5 million in credit loss expense.

Current wording

Sales and marketing expenses decreased primarily due to: (i) a decrease of $12.7 million in personnel costs, driven largely by a decrease in headcount and a decrease in stock-based compensation; (ii) a decrease of $1.2 million in costs to support the business and related infrastructure, which include allocated overhead costs; (iii) a decrease of $1.1 million in marketing costs for media campaigns; (iv) a decrease of $0.8 million in training and travel-related costs; and (v) a decrease of $0.5 million in credit loss expense.

Previous wording

General and administrative expenses decreased primarily due to: (i) a decrease of $1.9 million in personnel costs, driven largely by a decrease in headcount and a decrease in stock-based compensation; (ii) a decrease of $1.8 million in outside services spend for consulting services; and (iii) a decrease of $0.2 million in insurance, business taxes, and licenses costs; offset by (iv) an increase of $0.2 million in costs to support the business and related infrastructure, which include allocated overhead costs.

Current wording

General and administrative expenses decreased primarily due to: (i) a decrease of $4.5 million in personnel costs, driven largely by a decrease in headcount and a decrease in stock-based compensation; and (ii) a decrease of $0.3 million in insurance, business taxes, and licenses costs; offset by (iii) an increase of $0.6 million in costs to support the business and related infrastructure, which include allocated overhead costs.

Previous wording

We define non-GAAP operating income as income (loss) from operations excluding stock-based compensation expense, employer taxes related to employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses, restructuring costs, and shareholder matters, which are not necessarily reflective of operational performance during a given period. We define non-GAAP operating margin as non-GAAP operating income as a percentage of revenue.

Current wording

We define non-GAAP operating income as income from operations excluding stock-based compensation expense, employer taxes related to employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses, restructuring costs, shareholder matters, and executive transition costs, which are not necessarily reflective of operational performance during a given period. We define non-GAAP operating margin as non-GAAP operating income as a percentage of revenue.

Previous 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, restructuring costs, shareholder matters, adjustment attributable to redeemable non-controlling interest, and income tax effects and 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 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, restructuring costs, shareholder matters, executive transition costs, adjustment attributable to redeemable non-controlling interest, and income tax effects and adjustments, which are not necessarily reflective of operational performance during a given period.

Previous wording

As of April 30, 2026, our principal sources of liquidity were cash and cash equivalents and investments totaling $444.0 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.

Current wording

As of July 31, 2026, our principal sources of liquidity were cash and cash equivalents and investments totaling $470.0 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

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, 2026, we had deferred revenue of $243.4 million, of which $240.6 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, 2026, we had deferred revenue of $236.0 million, of which $233.5 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

In March 2025, we announced that our Board of Directors approved a share repurchase program (the “2025 Share Repurchase Program”) for the repurchase of shares of our common stock in an aggregate amount of up to $150.0 million. In August 2025, our Board of Directors approved an additional $50.0 million under the 2025 Share Repurchase Program, thus allowing for the repurchase of shares of the Company’s common stock in an aggregate amount of up to $200.0 million. No other changes were made to the program. The 2025 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 three months ended April 30, 2026, we repurchased 8,532,838 shares of common stock through open market purchases at an average per share price of $7.40, completing the 2025 Share Repurchase Program, and retired 8,896,106 shares, which includes 363,268 which remained on the consolidated balance sheet as of January 31, 2026. Under the 2025 Share Repurchase Program, we repurchased a total of 18,606,569 shares of common stock through open market purchases at an average per share price of $10.75 for a total repurchase price of $200.0 million. As of April 30, 2026, all repurchased shares have been retired.

Current wording

In March 2025, we announced that our Board of Directors approved a share repurchase program (the “2025 Share Repurchase Program”) for the repurchase of shares of our common stock in an aggregate amount of up to $150.0 million. In August 2025, our Board of Directors approved an additional $50.0 million under the 2025 Share Repurchase Program, thus allowing for the repurchase of shares of the Company’s common stock in an aggregate amount of up to $200.0 million. No other changes were made to the program. The 2025 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 six months ended July 31, 2026, we repurchased 8,532,838 shares of common stock through open market purchases at an average per share price of $7.40, completing the 2025 Share Repurchase Program, and retired 8,896,106 shares, which includes 363,268 which remained on the consolidated balance sheet as of January 31, 2026. Under the 2025 Share Repurchase Program, we repurchased a total of 18,606,569 shares of common stock through open market purchases at an average per share price of $10.75 for a total repurchase price of $200.0 million. As of July 31, 2026, all repurchased shares have been retired.

Previous wording

Our estimated future obligations as of April 30, 2026 include both current and long-term obligations. Our debt obligations total $396.3 million, all of which is long-term. Additionally, we had $1.0 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 $5.2 million and a long-term obligation of $11.2 million. Operating lease obligations primarily represent the initial contracted term for leases that have commenced as of April 30, 2026, not including any future optional renewal periods.

Current wording

Our estimated future obligations as of July 31, 2026 include both current and long-term obligations. Our debt obligations total $396.9 million, all of which is long-term. Additionally, we had $1.0 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 $6.0 million and a long-term obligation of $9.9 million. Operating lease obligations primarily represent the initial contracted term for leases that have commenced as of July 31, 2026, 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, 2026, decreasing our total cash balance by $0.1 million as of April 30, 2026 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, 2026, decreasing our total cash balance by $0.1 million as of July 31, 2026 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 income (loss) performance due to the 1.0% increase in revenue, along with a 16.4% 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.

Current wording

Net cash provided by operating activities improved, primarily due to improvements in our operating income performance due to the 0.9% increase in revenue, along with a 11.7% 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 increased, primarily due to a decrease in proceeds from maturities of available-for-sale investments, offset by an increase in purchases of available-for-sale investments.

Current wording

Net cash used in investing activities increased, primarily due to an increase in purchases of property and equipment.

Previous wording

Net cash used in financing activities increased, primarily due to an increase in repurchases of common stock, a decrease in proceeds of issuance from common stock upon exercise of stock options, and a decrease in employee payroll taxes related to the net share settlement of restricted stock units.

Current wording

Net cash used in financing activities increased, primarily due to an increase in repurchases of common stock, a decrease in cash used to repay our convertible senior notes, and a decrease in employee payroll taxes related to the net share settlement of restricted stock units.