Business Wire | Mar 17, 2021 04:05PM EDT

PagerDuty Announces Fourth Quarter and Full Year Results for Fiscal 2021

Mar. 17, 2021

SAN FRANCISCO--(BUSINESS WIRE)--Mar. 17, 2021--PagerDuty, Inc. (NYSE:PD), a global leader in digital operations management, today announced financial results for the fourth quarter and full year of fiscal 2021 ended January 31, 2021.

"The fourth quarter was outstanding for PagerDuty. We added $59 million in revenue, reaccelerating growth sequentially to 29% year over year, as our momentum built to close out an unparalleled year," said Jennifer Tejada, CEO at PagerDuty. "During fiscal 2021 we continued to see strength in the enterprise and mid-market, with total dollar-based net retention of 121 percent and enterprise dollar-based net retention above 125 percent exiting the year. I am incredibly appreciative of our customers and partners for their loyalty and trust, and grateful for the PagerDuty team, whose resilience, commitment and customer devotion over the last 12 months was inspiring and delivered a great outcome for our stakeholders."

Fourth Quarter Fiscal 2021 Financial Highlights

* Revenue: Total revenue was $59.3 million, up 29.1% year-over-year. * Gross Margin: GAAP gross margin was 84.1% compared to 86.2% in the fourth quarter of fiscal 2020. Non-GAAP gross margin was 85.6% compared to 86.7% in the fourth quarter of fiscal 2020. * Operating Loss: GAAP operating loss was $18.4 million, or GAAP operating margin of negative 31.0%, compared to an $11.8 million GAAP operating loss, or GAAP operating margin of negative 25.6%, in the fourth quarter of fiscal 2020. Non-GAAP operating loss was $5.4 million, or non-GAAP operating margin of negative 9.1%, compared to a $3.9 million non-GAAP operating loss, or non-GAAP operating margin of negative 8.6%, in the fourth quarter of fiscal 2020. * Net Loss: GAAP net loss was $22.1 million, compared to $10.4 million in the fourth quarter of fiscal 2020. GAAP net loss per share was $0.27, compared to $0.14 in the fourth quarter of fiscal 2020. Non-GAAP net loss was $5.8 million, compared to $2.6 million in the fourth quarter of fiscal 2020. Non-GAAP net loss per share was $0.07, compared to $0.03 in the fourth quarter of fiscal 2020. * Cash Flow: Net cash provided by operations was $3.4 million, or 5.7% of revenue, compared to net cash provided by operations of $1.8 million, or 3.9% of revenue, in the fourth quarter of fiscal 2020. Free cash flow was $2.3 million, or 3.8% of revenue, compared to negative $0.2 million, or (0.4)% of revenue, in the fourth quarter of fiscal 2020. * Cash and Cash Equivalents and Investments were $560.3 million as of January 31, 2021.

Full Year Fiscal 2021 Financial Highlights

* Revenue: Total revenue was $213.6 million, up 28.4% year-over-year. * Gross Margin: GAAP gross margin was 85.6% compared to 85.2% for fiscal 2020. Non-GAAP gross margin was 86.6% compared to non-GAAP gross margin of 85.8% for fiscal 2020. * Operating Loss: GAAP operating loss was $66.3 million, or GAAP operating margin of negative 31.0%, compared to a $55.6 million GAAP operating loss, or GAAP operating margin of negative 33.4%, for fiscal 2020. Non-GAAP operating loss was $19.4 million, or non-GAAP operating margin of negative 9.1%, compared to a $28.4 million non-GAAP operating loss, or non-GAAP operating margin of negative 17.0%, for fiscal 2020. * Net Loss: GAAP net loss was $68.9 million, compared to $50.3 million for fiscal 2020. GAAP net loss per share was $0.87, compared to $0.77 for fiscal 2020. Non-GAAP net loss was $19.3 million, compared to $23.1 million for fiscal 2020. Non-GAAP net loss per share was $0.24, compared to $0.35 for fiscal 2020. * Cash Flow: Net cash provided by operations was $10.1 million, or 4.7% of revenue, compared to net cash used in operations of $0.2 million, or (0.1)% of revenue, for fiscal 2020. Free cash flow was $5.2 million, or 2.5% of revenue, compared to negative $5.3 million, or (3.2)% of revenue, for fiscal 2020.

The section titled "Non-GAAP Financial Measures" below contains a description of the non-GAAP financial measures and reconciliations between historical GAAP and non-GAAP information.

Recent Highlights

* Continued Expansion Within Existing Customers: PagerDuty had the eighth consecutive quarter in which approximately a third of its enterprise customers expanded. Expansions during the quarter included Dropbox, Marqeta, Morgan Stanley, Netflix, Okta, and Slack. * Customer Growth: PagerDuty had over 13,800 customers as of January 31, 2021. These included new customers Ally Financial, Ameren Corporation, Jetblue Airways, Sega Sammy Holdings, SK Telecom, and WaWa. * Record Setting Quarter: PagerDuty had a record-setting quarter closing its largest one time, multi-year expansion in its history, its first million dollar contract in EMEA, and achieving record transaction growth in the mid-market. For the year, annual recurring revenue (ARR) from the PagerDuty Digital Operations plan doubled and now accounts for over 20 percent of total ARR. * Expanding Use Cases and Platform: During the year, customers adopted PagerDuty beyond on-call and incident response to security, where users grew 56 percent, and customer service, where users grew 40 percent year over year. PagerDuty continues to add integration partners for a total of over 530 integrations, with partners such as Buildkite, Gitlab and Jenkins for change events and Jfrog for security. * Inclusion, Diversity & Equity: During the year, PagerDuty continued investment and volunteer support for racial and social equity and inclusive leadership development. PagerDuty's ID&E efforts resulted in improved access, representation, pay equity and career opportunities. The Company's board of directors is among the most balanced in the tech industry, representing the diverse communities we serve.

Financial Outlook

For the first quarter of fiscal 2021, PagerDuty currently expects:

* Total revenue of $61.0 million - $63.0 million, representing a growth rate of 23% - 27% year-over-year * Non-GAAP net loss per share of $0.10 - $0.09, assuming approximately 83 million shares

For the full fiscal year 2021, PagerDuty currently expects:

* Total revenue of $264.0 million - $270.0 million, representing a growth rate of 24% - 26% year-over-year * Non-GAAP net loss per share of $0.43 - $0.36, assuming approximately 84 million shares

These statements are forward-looking and actual results may differ materially. Please refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

PagerDuty has not reconciled its expectations as to non-GAAP net loss per share to GAAP net loss per share because certain items are out of its control or cannot be reasonably predicted. Accordingly, a reconciliation for forward-looking non-GAAP net loss per share is not available without unreasonable effort.

Conference Call Information:

PagerDuty will host a conference call and live webcast for analysts and investors at 2:00 p.m. Pacific Time on March 17, 2021. This news release with the financial results will be accessible from PagerDuty's website at investor.pagerduty.com prior to the conference call. A live webcast of the conference call will be accessible from the PagerDuty investor relations website at investor.pagerduty.com.

Supplemental Financial and Other Information:

Supplemental financial and other information can be accessed through PagerDuty's investor relations website at investor.pagerduty.com. PagerDuty uses the investor relations section on its website as the means of complying with its disclosure obligations under Regulation FD. Accordingly, we recommend that investors should monitor PagerDuty's investor relations website in addition to following PagerDuty's press releases, SEC filings, social media, including PagerDuty's Twitter account (twitter.com/pagerduty), the Twitter account @jenntejada and Facebook page (facebook.com/pagerduty), and public conference calls and webcasts.

Non-GAAP Financial Measures:

This press release and the accompanying tables contain the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss per share, and free cash flow.

PagerDuty believes that non-GAAP financial measures, when taken collectively, may be helpful to investors because they provide consistency and comparability with past financial performance and can assist in comparisons with other companies, some of which use similar non-GAAP financial measures to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies.

The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in PagerDuty's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by PagerDuty's management about which expenses and income are excluded or included in determining these non-GAAP financial measures. A reconciliation is provided below for each historical non-GAAP financial measure to the most directly comparable financial measure presented in accordance with GAAP.

Specifically, PagerDuty excludes the following from its historical and prospective non-GAAP financial measures, as applicable:

Share-based Compensation: PagerDuty utilizes share-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of its stockholders and at long-term retention, rather than to address operational performance for any particular period. As a result, share-based compensation expenses vary for reasons that are generally unrelated to financial and operational performance in any particular period.

Amortization of Acquired Intangible Assets: PagerDuty views amortization of acquired intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of purchased intangibles is an expense that is not typically affected by operations during any particular period.

Acquisition-Related Expenses: PagerDuty views acquisition-related expenses, such as transaction costs and acquisition-related retention payments, as events that are not necessarily reflective of operational performance during a period. In particular, PagerDuty believes the consideration of measures that exclude such expenses can assist in the comparison of operational performance in different periods which may or may not include such expenses.

Amortization of Debt Issuance Costs: The imputed interest rate of Convertible Senior Notes (the "Notes") was approximately 7.88%. This is a result of the debt discounts recorded for the conversion features of the Notes that are required to be separately accounted for as equity, and debt issuance costs, which reduce the carrying value of the convertible debt instruments. The debt discounts are amortized as interest expense together with the issuance costs of the debt. The expense for the amortization of debt discount and debt issuance costs is a non-cash item, and PagerDuty believes the exclusion of this interest expense will provide for a more useful comparison of its operational performance in different periods.

Acquisition-Related Income Tax Benefit PagerDuty views acquisition-related income tax benefits as events that are not necessarily reflective of operational performance during a period. In particular, PagerDuty believes the consideration of measures that exclude such benefits can assist in the comparison of operational performance in different periods which may or may not include such benefits.

PagerDuty defines non-GAAP operating loss as GAAP loss from operations excluding stock-based compensation expense, non-cash charitable contribution expense, amortization of acquired intangible assets, and transaction-related costs. PagerDuty defines non-GAAP net loss (which is used in calculating non-GAAP net loss per share) as GAAP net loss excluding amortization of debt discount and issuance costs, stock-based compensation expense, non-cash charitable contribution expense, amortization of acquired intangible assets, transaction-related costs, and acquisition-related income tax benefit. There are a number of limitations related to the use of these non-GAAP measures as compared to GAAP operating loss and net loss, including that the non-GAAP measures exclude stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense in PagerDuty's business and an important part of its compensation strategy.

PagerDuty defines free cash flow as net cash provided by (used in) operating activities, less cash used for purchases of property and equipment and capitalized internal-use software. In addition to the reasons stated above, PagerDuty believes that free cash flow is useful to investors as a liquidity measure because it measures PagerDuty's ability to generate or use cash in excess of its capital investments in property and equipment to strengthen its balance sheet and further invest in its business and potential strategic initiatives. PagerDuty uses free cash flow in conjunction with traditional GAAP measures as part of its overall assessment of its liquidity, including the preparation of PagerDuty's annual operating budget and quarterly forecasts, to evaluate the effectiveness of its business strategies, and to assess its liquidity.

There are a number of limitations related to the use of free cash flow as compared to net cash provided by (used in) operating activities, including that free cash flow includes capital expenditures, the benefits of which are realized in periods subsequent to those when expenditures are made.

PagerDuty encourages investors to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate PagerDuty's business.

Please see the reconciliation tables at the end of this release for the reconciliation of GAAP and non-GAAP results.

Forward-Looking Statements:

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our future financial performance and outlook, market positioning, addressable market, and expected benefits of our product improvements and new integrations. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," "shall" and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in our Form 10-K filed with the Securities and Exchange Commission (SEC) on March 19, 2020 and our Form 10-Qs filed with the SEC on June 5, 2020, September 3, 2020 and December 4, 2020. Additional information will be made available in our annual report on Form 10-K for the fiscal year ended January 31, 2021 and other filings and reports that we may file from time to time with the SEC. In particular, the following risks and uncertainties, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the effect of uncertainties related to the COVID-19 pandemic on U.S. and global markets, our business, operations, revenue results, cash flow, operating expenses, demand for our solutions, sales cycles, customer retention and our customers' businesses; our ability to achieve and maintain future profitability; our ability to attract new customers and retain and sell additional functionality and services to our existing customers; our ability to sustain and manage our growth; our dependence on revenue from a single product; our ability to compete effectively in an increasingly competitive market; and general market, political, economic, and business conditions.

Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments will cause our views to change. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

About PagerDuty

PagerDuty, Inc. (NYSE:PD) is a leader in digital operations management. In an always-on world, organizations of all sizes trust PagerDuty to help them deliver a perfect digital experience to their customers, every time. Teams use PagerDuty to identify issues and opportunities in real time and bring together the right people to fix problems faster and prevent them in the future. Notable customers include GE, Cisco, Genentech, Electronic Arts, Cox Automotive, Netflix, Shopify, Zoom, DoorDash, Lululemon and more. To learn more and try PagerDuty for free, visit www.pagerduty.com. Follow our blog and connect with us on Twitter, LinkedIn, YouTube and Facebook.

PagerDuty, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share data)

(unaudited)

Three Months Ended January Year Ended January 31, 31,

2021 2020 2021 2020

Revenue $ 59,284 $ 45,926 $ 213,556 $ 166,351

Cost of revenue^(1) 9,401 6,353 30,686 24,579

Gross profit 49,883 39,573 182,870 141,772

Operating expenses:

Research and 17,861 13,851 64,566 49,011 development^(1)

Sales and marketing^ 33,884 24,972 122,155 97,350 (1)

General and 16,532 12,506 62,431 50,970 administrative^(1)

Total operating 68,277 51,329 249,152 197,331 expenses

Loss from operations (18,394) (11,756) (66,282) (55,559)

Interest income 857 1,409 4,232 5,692

Interest expense (4,224) - (9,965) -

Other income 67 (143) (794) 203 (expense), net

Loss before(provision for) (21,694) (10,490) (72,809) (49,664) benefit from incometaxes

(Provision for)benefit from income (454) 50 3,906 (675) taxes

Net loss $ (22,148) $ (10,440) $ (68,903) $ (50,339)

Comprehensive (loss) income

Unrealized (loss) (291) 187 206 137 gain on investments

Total other $ (22,439) $ (10,253) $ (68,697) $ (50,202) comprehensive loss

Net loss per share, $ (0.27) $ (0.14) $ (0.87) $ (0.77) basic and diluted

Weighted-averageshares used incalculating net loss 81,933 77,165 79,614 65,544 per share, basic anddiluted

(1) Includes stock-based compensation expense as follows (in thousands, unaudited):

Three Months Ended January 31,

Year Ended January 31,

2021

2020

2021

2020

Cost of revenue

$

607

$

245

$

1,702

$

1,018

Research and development

3,636

1,807

11,095

5,566

Sales and marketing

3,324

2,839

14,733

8,924

General and administrative

3,929

2,922

15,701

11,697

Total

$

11,496

$

7,813

$

43,231

$

27,205

(1) Includes stock-based compensation expense as follows (in thousands,unaudited):

Three Months Ended January Year Ended January 31, 31,

2021 2020 2021 2020

Cost of revenue $ 607 $ 245 $ 1,702 $ 1,018

Research and development 3,636 1,807 11,095 5,566

Sales and marketing 3,324 2,839 14,733 8,924

General and administrative 3,929 2,922 15,701 11,697

Total $ 11,496 $ 7,813 $ 43,231 $ 27,205

PagerDuty, Inc.Consolidated Balance Sheets

(in thousands)

(unaudited)

As of January 31,

As of January 31,

2021

2020

Assets

Current assets:

Cash and cash equivalents

$

339,166

$

124,024

Investments, current

221,112

227,375

Accounts receivable, net of allowance for doubtful accounts of $1,188 and $810 as of January 31, 2021 and January 31, 2020, respectively

55,119

37,128

Deferred contract costs, current

12,330

9,301

Prepaid expenses and other current assets

10,587

7,163

Total current assets

638,314

404,991

Property and equipment, net

12,639

12,369

Deferred contract costs, non-current

19,257

16,387

Lease right-of-use assets

24,691

-

Goodwill

72,126

-

Intangible assets, net

26,633

-

Other assets

1,783

1,651

Total assets

$

795,443

$

435,398

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

5,747

$

6,434

Accrued expenses and other current liabilities

9,627

7,197

Accrued compensation

28,372

13,911

Deferred revenue, current

123,686

87,490

Lease liabilities, current

5,262

-

Total current liabilities

172,694

115,032

Convertible senior notes, net

217,528

-

Deferred revenue, non-current

6,286

5,079

Lease liabilities, non-current

26,542

-

Other liabilities

5,666

7,349

Total liabilities

428,716

127,460

Stockholders' equity:

Common stock

-

-

Additional paid-in-capital

614,494

487,008

Accumulated other comprehensive income

343

137

Accumulated deficit

(248,110)

(179,207)

Total stockholders' equity

366,727

307,938

Total liabilities and stockholders' equity

$

795,443

$

435,398

PagerDuty, Inc.

Consolidated Balance Sheets

(in thousands)

(unaudited)

As of As of January 31, January 31,

2021 2020

Assets

Current assets:

Cash and cash equivalents $ 339,166 $ 124,024

Investments, current 221,112 227,375

Accounts receivable, net of allowance for doubtfulaccounts of $1,188 and $810 as of January 31, 2021 55,119 37,128 and January 31, 2020, respectively

Deferred contract costs, current 12,330 9,301

Prepaid expenses and other current assets 10,587 7,163

Total current assets 638,314 404,991

Property and equipment, net 12,639 12,369

Deferred contract costs, non-current 19,257 16,387

Lease right-of-use assets 24,691 -

Goodwill 72,126 -

Intangible assets, net 26,633 -

Other assets 1,783 1,651

Total assets $ 795,443 $ 435,398

Liabilities and stockholders' equity

Current liabilities:

Accounts payable $ 5,747 $ 6,434

Accrued expenses and other current liabilities 9,627 7,197

Accrued compensation 28,372 13,911

Deferred revenue, current 123,686 87,490

Lease liabilities, current 5,262 -

Total current liabilities 172,694 115,032

Convertible senior notes, net 217,528 -

Deferred revenue, non-current 6,286 5,079

Lease liabilities, non-current 26,542 -

Other liabilities 5,666 7,349

Total liabilities 428,716 127,460

Stockholders' equity:

Common stock - -

Additional paid-in-capital 614,494 487,008

Accumulated other comprehensive income 343 137

Accumulated deficit (248,110) (179,207)

Total stockholders' equity 366,727 307,938

Total liabilities and stockholders' equity $ 795,443 $ 435,398

PagerDuty, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended January 31,

Year Ended January 31,

2021

2020

2021

2020

Cash flows from operating activities

Net loss

$

(22,148)

$

(10,440)

$

(68,903)

$

(50,339)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

1,918

662

5,270

2,337

Amortization of deferred contract costs

3,083

2,281

10,977

7,780

Stock-based compensation

11,496

7,813

43,231

27,205

Amortization of debt issuance costs

3,315

-

7,808

-

Noncash lease expense

1,099

-

4,398

-

Other

621

52

2,518

(331)

Changes in operating assets and liabilities:

Accounts receivable

(13,758)

(7,934)

(17,637)

(3,601)

Deferred contract costs

(5,932)

(5,051)

(16,876)

(15,996)

Prepaid expenses and other assets

1,583

2,752

(2,022)

(2,112)

Accounts payable

526

276

316

(1,110)

Accrued expenses and other liabilities

(3,034)

1,204

(810)

3,668

Accrued compensation

3,495

(1,758)

11,184

3,861

Deferred revenue

22,248

11,945

34,723

28,465

Lease liabilities

(1,123)

-

(4,082)

-

Net cash provided by (used in) operating activities

3,389

1,802

10,095

(173)

Cash flows from investing activities

Purchases of property and equipment

(636)

(1,984)

(4,038)

(5,174)

Capitalized internal-use software costs

(482)

-

(810)

-

Business acquisitions, net of cash acquired

-

-

(49,656)

-

Purchases of held-to-maturity investments

-

-

-

(45,736)

Proceeds from maturities of held-to-maturity of investments

-

9,000

28,040

17,950

Purchases of available-for-sale investments

(68,788)

(91,404)

(222,042)

(224,110)

Proceeds from maturities of available-for-sale investments

66,549

25,000

189,901

25,000

Proceeds from sales of available-for-sale investments

-

-

9,285

-

Net cash used in investing activities

(3,357)

(59,388)

(49,320)

(232,070)

Cash flows from financing activities

Proceeds from issuance of convertible senior notes, net of issuance costs paid of $9,302

(467)

-

278,198

-

Purchases of capped calls related to convertible senior notes

-

-

(35,708)

-

Proceeds from initial public offering, net of underwriters' discounts and commissions

-

-

-

220,086

Payments of costs related to initial public offering

-

(342)

-

(5,945)

Proceeds from repayment of promissory note

-

-

-

515

Proceeds from issuance of common stock upon exercise of stock options

4,389

1,437

14,098

7,187

Proceeds from Employee Stock Purchase Plan

2,428

4,117

5,986

4,117

Employee payroll taxes paid related to net share settlement of restricted stock units

(3,873)

(2)

(8,207)

(16)

Net cash provided by financing activities

2,477

5,210

254,367

225,944

Net increase (decrease) in cash, cash equivalents, and restricted cash

2,509

(52,376)

215,142

(6,299)

Cash, cash equivalents, and restricted cash at beginning of year

336,657

176,400

124,024

130,323

Cash, cash equivalents, and restricted cash at end of year

$

339,166

$

124,024

$

339,166

$

124,024

PagerDuty, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended January Year Ended January 31, 31,

2021 2020 2021 2020

Cash flows from operating activities

Net loss $ (22,148) $ (10,440) $ (68,903) $ (50,339)

Adjustments toreconcile net loss tonet cash provided by (used in) operatingactivities:

Depreciation and 1,918 662 5,270 2,337 amortization

Amortization ofdeferred contract 3,083 2,281 10,977 7,780 costs

Stock-based 11,496 7,813 43,231 27,205 compensation

Amortization of debt 3,315 - 7,808 - issuance costs

Noncash lease expense 1,099 - 4,398 -

Other 621 52 2,518 (331)

Changes in operatingassets and liabilities:

Accounts receivable (13,758) (7,934) (17,637) (3,601)

Deferred contract (5,932) (5,051) (16,876) (15,996) costs

Prepaid expenses and 1,583 2,752 (2,022) (2,112) other assets

Accounts payable 526 276 316 (1,110)

Accrued expenses and (3,034) 1,204 (810) 3,668 other liabilities

Accrued compensation 3,495 (1,758) 11,184 3,861

Deferred revenue 22,248 11,945 34,723 28,465

Lease liabilities (1,123) - (4,082) -

Net cash provided by(used in) operating 3,389 1,802 10,095 (173) activities

Cash flows from investing activities

Purchases of property (636) (1,984) (4,038) (5,174) and equipment

Capitalizedinternal-use software (482) - (810) - costs

Businessacquisitions, net of - - (49,656) - cash acquired

Purchases ofheld-to-maturity - - - (45,736) investments

Proceeds frommaturities of - 9,000 28,040 17,950 held-to-maturity ofinvestments

Purchases ofavailable-for-sale (68,788) (91,404) (222,042) (224,110) investments

Proceeds frommaturities of 66,549 25,000 189,901 25,000 available-for-saleinvestments

Proceeds from salesof available-for-sale - - 9,285 - investments

Net cash used in (3,357) (59,388) (49,320) (232,070) investing activities

Cash flows from financing activities

Proceeds fromissuance ofconvertible senior (467) - 278,198 - notes, net ofissuance costs paidof $9,302

Purchases of cappedcalls related to - - (35,708) - convertible seniornotes

Proceeds from initialpublic offering, netof underwriters' - - - 220,086 discounts andcommissions

Payments of costsrelated to initial - (342) - (5,945) public offering

Proceeds fromrepayment of - - - 515 promissory note

Proceeds fromissuance of common 4,389 1,437 14,098 7,187 stock upon exerciseof stock options

Proceeds fromEmployee Stock 2,428 4,117 5,986 4,117 Purchase Plan

Employee payrolltaxes paid related tonet share settlement (3,873) (2) (8,207) (16) of restricted stockunits

Net cash provided by 2,477 5,210 254,367 225,944 financing activities

Net increase(decrease) in cash, 2,509 (52,376) 215,142 (6,299) cash equivalents, andrestricted cash

Cash, cashequivalents, and 336,657 176,400 124,024 130,323 restricted cash atbeginning of year

Cash, cashequivalents, and $ 339,166 $ 124,024 $ 339,166 $ 124,024 restricted cash atend of year

PagerDuty, Inc.

Reconciliation of GAAP to Non-GAAP Data

(in thousands, except percentages and per share data)

(unaudited)

Three Months Ended January 31,

Year ended January 31,

2021

2020

2021

2020

Reconciliation of gross profit and gross margin

GAAP gross profit

$

49,883

$

39,573

$

182,870

$

141,772

Plus: Share-based compensation

607

245

$

1,702

1,018

Plus: Amortization of acquired intangible assets

280

-

373

-

Non-GAAP gross profit

$

50,770

$

39,818

$

184,945

$

142,790

GAAP gross margin

84.1

%

86.2

%

85.6

%

85.2

%

Non-GAAP adjustments

1.5

%

0.5

%

1.0

%

0.6

%

Non-GAAP gross margin

85.6

%

86.7

%

86.6

%

85.8

%

Reconciliation of operating expenses

GAAP research and development

$

17,861

$

13,851

64,566

$

49,011

Less: Share-based compensation

(3,636)

(1,807)

$

(11,095)

(5,566)

Less: Acquisition-related expenses

(460)

-

(614)

-

Non-GAAP research and development

$

13,765

$

12,044

$

52,857

$

43,445

GAAP sales and marketing

$

33,884

$

24,972

$

122,155

$

97,350

Less: Share-based compensation

(3,324)

(2,839)

(14,733)

(8,924)

Less: Amortization of acquired intangible assets

(595)

-

(794)

-

Non-GAAP sales and marketing

$

29,965

$

22,133

$

106,628

$

88,426

GAAP general and administrative

$

16,532

$

12,506

$

62,431

$

50,970

Less: Share-based compensation

(3,929)

(2,922)

(15,701)

(11,697)

Less: Acquisition-related expenses

(191)

-

(1,823)

-

Non-GAAP general and administrative

$

12,412

$

9,584

$

44,907

$

39,273

Reconciliation of operating loss and operating margin

GAAP operating loss

$

(18,394)

$

(11,756)

$

(66,282)

$

(55,559)

Plus: Share-based compensation

11,496

7,813

43,231

27,205

Plus: Amortization of acquired intangible assets

875

-

1,167

-

Plus: Acquisition-related expenses

651

-

2,437

-

Non-GAAP operating loss

$

(5,372)

$

(3,943)

$

(19,447)

$

(28,354)

GAAP operating margin

(31.0)

%

(25.6)

%

(31.0)

%

(33.4)

%

Non-GAAP adjustments

21.9

%

17.0

%

21.9

%

16.4

%

Non-GAAP operating margin

(9.1)

%

(8.6)

%

(9.1)

%

(17.0)

%

Reconciliation of net loss

GAAP net loss

$

(22,148)

$

(10,440)

$

(68,903)

$

(50,339)

Plus: Share-based compensation

11,496

7,813

43,231

27,205

Plus: Amortization of debt discount and issuance costs

3,315

-

7,808

-

Plus: Amortization of acquired intangible assets

875

-

1,167

-

Plus: Acquisition-related expenses

651

-

2,437

-

Plus: Acquisition-related tax benefit

41

-

(5,017)

-

Non-GAAP net loss

$

(5,770)

$

(2,627)

$

(19,277)

$

(23,134)

Reconciliation of net loss per share, basic and diluted

GAAP net loss per share, basic and diluted

$

(0.27)

$

(0.14)

$

(0.87)

$

(0.77)

Non-GAAP adjustments to net loss

0.20

0.11

0.62

0.42

Non-GAAP net loss per share, basic and diluted

$

(0.07)

$

(0.03)

$

(0.24)

$

(0.35)

Note: Certain figures in the tables above may not sum due to rounding.

PagerDuty, Inc.

Reconciliation of GAAP to Non-GAAP Data

(in thousands, except percentages and per share data)

(unaudited)

Three Months Ended January Year ended January 31, 31,

2021 2020 2021 2020

Reconciliation ofgross profit and gross margin

GAAP gross profit $ 49,883 $ 39,573 $ 182,870 $ 141,772

Plus: Share-based 607 245 $ 1,702 1,018 compensation

Plus: Amortization ofacquired intangible 280 - 373 - assets

Non-GAAP gross profit $ 50,770 $ 39,818 $ 184,945 $ 142,790

GAAP gross margin 84.1 % 86.2 % 85.6 % 85.2 %

Non-GAAP adjustments 1.5 % 0.5 % 1.0 % 0.6 %

Non-GAAP gross margin 85.6 % 86.7 % 86.6 % 85.8 %



Reconciliation of operating expenses

GAAP research and $ 17,861 $ 13,851 64,566 $ 49,011 development

Less: Share-based (3,636) (1,807) $ (11,095) (5,566) compensation

Less:Acquisition-related (460) - (614) - expenses

Non-GAAP research and $ 13,765 $ 12,044 $ 52,857 $ 43,445 development



GAAP sales and $ 33,884 $ 24,972 $ 122,155 $ 97,350 marketing

Less: Share-based (3,324) (2,839) (14,733) (8,924) compensation

Less: Amortization ofacquired intangible (595) - (794) - assets

Non-GAAP sales and $ 29,965 $ 22,133 $ 106,628 $ 88,426 marketing



GAAP general and $ 16,532 $ 12,506 $ 62,431 $ 50,970 administrative

Less: Share-based (3,929) (2,922) (15,701) (11,697) compensation

Less:Acquisition-related (191) - (1,823) - expenses

Non-GAAP general and $ 12,412 $ 9,584 $ 44,907 $ 39,273 administrative



Reconciliation ofoperating loss and operating margin

GAAP operating loss $ (18,394) $ (11,756) $ (66,282) $ (55,559)

Plus: Share-based 11,496 7,813 43,231 27,205 compensation

Plus: Amortization ofacquired intangible 875 - 1,167 - assets

Plus:Acquisition-related 651 - 2,437 - expenses

Non-GAAP operating $ (5,372) $ (3,943) $ (19,447) $ (28,354) loss

GAAP operating margin (31.0) % (25.6) % (31.0) % (33.4) %

Non-GAAP adjustments 21.9 % 17.0 % 21.9 % 16.4 %

Non-GAAP operating (9.1) % (8.6) % (9.1) % (17.0) %margin



Reconciliation of net loss

GAAP net loss $ (22,148) $ (10,440) $ (68,903) $ (50,339)

Plus: Share-based 11,496 7,813 43,231 27,205 compensation

Plus: Amortization ofdebt discount and 3,315 - 7,808 - issuance costs

Plus: Amortization ofacquired intangible 875 - 1,167 - assets

Plus:Acquisition-related 651 - 2,437 - expenses

Plus:Acquisition-related 41 - (5,017) - tax benefit

Non-GAAP net loss $ (5,770) $ (2,627) $ (19,277) $ (23,134)



Reconciliation of netloss per share, basic and diluted

GAAP net loss pershare, basic and $ (0.27) $ (0.14) $ (0.87) $ (0.77) diluted

Non-GAAP adjustments 0.20 0.11 0.62 0.42 to net loss

Non-GAAP net loss pershare, basic and $ (0.07) $ (0.03) $ (0.24) $ (0.35) diluted

Note: Certain figures in the tables above may not sum due to rounding.

PagerDuty, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands, except percentages and per share data)

(unaudited)

Free Cash Flow

Three Months Ended January 31,

Year Ended January 31,

2021

2020

2021

2020

Net cash provided by (used in) operating activities

$

3,389

$

1,802

$

10,095

$

(173)

Less:

Purchases of property and equipment

(636)

(1,984)

(4,038)

(5,174)

Capitalization of internal-use software

(482)

-

(810)

-

Free cash flow

$

2,271

$

(182)

$

5,247

$

(5,347)

Net cash used in investing activities

$

(3,357)

$

(59,388)

$

(49,320)

$

(232,070)

Net cash provided by financing activities

$

2,477

$

5,210

$

254,367

$

225,944

Free cash flow margin

3.8

%

(0.4)

%

2.5

%

(3.2)

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20210317005795/en/

CONTACT: Investor Relations Contact: Christine Cloonan investor@pagerduty.com