Business Wire | Jun 3, 2021 04:06PM EDT

PagerDuty Announces First Quarter Fiscal 2022 Financial Results

Jun. 03, 2021

SAN FRANCISCO--(BUSINESS WIRE)--Jun. 03, 2021--PagerDuty, Inc. (NYSE:PD), a global leader in digital operations management, today announced financial results for the first quarter of fiscal 2022, ended April 30, 2021.

"PagerDuty's business is benefiting from recovery, as both the macro trends and market landscape continue to move in our favor. As communities, industries, and businesses move forward to a post-pandemic world, our platform is essential infrastructure for our customers. Building off a strong close to fiscal 2021, we beat both our top and bottom line guide," said Jennifer Tejada, CEO at PagerDuty. "Year-over-year revenue growth was 28%, with total dollar based net retention of 121% and enterprise dollar based net retention above 125%. Digital operations are now business operations, while digital acceleration, cloud migration, and DevOps transformation are central business strategies which will drive PagerDuty's success going forward."

First Quarter Fiscal 2022 Financial Highlights

* Revenue: Total revenue was $63.6 million, up 27.7% year over year. * Gross Margin: GAAP gross margin was 83.6% compared to 86.0% in the first quarter of fiscal 2021. Non-GAAP gross margin was 85.2% compared to 86.7% in the first quarter of fiscal 2021. * Operating Loss: GAAP operating loss was $21.2 million, or GAAP operating margin of negative 33.4%, compared to a $12.6 million GAAP operating loss, or GAAP operating margin of negative 25.3%, in the first quarter of fiscal 2021. Non-GAAP operating loss was $5.6 million, or non-GAAP operating margin of negative 8.8%, compared to a $4.1 million non-GAAP operating loss, or non-GAAP operating margin of negative 8.3%, in the first quarter of fiscal 2021. * Net Loss: GAAP net loss was $22.6 million, compared to $11.5 million in the first quarter of fiscal 2021. GAAP net loss per share was $0.27, compared to $0.15 in the first quarter of fiscal 2021. Non-GAAP net loss was $6.5 million, compared to $3.0 million in the first quarter of fiscal 2021. Non-GAAP net loss per share was $0.08, compared to $0.04 in the first quarter of fiscal 2021. * Cash Flow: Net cash provided by operations was $1.6 million, or 2.5% of revenue, compared to net cash used in operating activities of $0.2 million, or negative 0.4% of revenue, in the first quarter of fiscal 2021. Free cash flow was negative $0.4 million, or negative 0.6% of revenue, compared to negative $2.9 million, or negative 5.8% of revenue, in the first quarter of fiscal 2021. * Cash and Cash Equivalents and Current Investments were $557.0 million as of April 30, 2021.

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

* Land and expand: PagerDuty's go to market engine continues to bring in new customers and expand with current customers-across verticals and use cases-including customer service and SecOps. Expansions in the quarter included: Adevinta; Bell Canada; Glovo; LegalZoom; Nvidia; Retail Business Services; and Vroom. * Companies on the platform: PagerDuty had over 16,800 companies on its platform as of April 30, 2021. New customers within the quarter included: Drizly; Jaguar Land Rover; Lunchbox; OAG Aviation; Pony.ai; Swissquote Bank; and Truist Financial. * Platform Integration: PagerDuty is solidifying its place as the central nervous system for its customers' digital ecosystems with integrations at over 560 partners including deeper integrations with AWS, Crowdstrike, JFrog and Zendesk in the quarter.

Financial Outlook

For the second quarter of fiscal 2022, PagerDuty currently expects:

* Total revenue of $64.5 million - $66.5 million, representing a growth rate of 27% - 31% year over year * Non-GAAP net loss per share of $0.16 - $0.15 assuming approximately 84 million shares

For the full fiscal year 2022, PagerDuty currently expects:

* Total revenue of $267.0 million - $272.0 million, representing a growth rate of 25% - 27% year over year * Non-GAAP net loss per share of $0.42 - $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 section 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 June 3, 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.

Employer Taxes Related to Employee Stock Transactions: PagerDuty views the amount of employer taxes related to its employee stock transactions as an expense that is dependent on its stock price, employee exercise and other award disposition activity, and other factors that are beyond PagerDuty's control. As a result, employer taxes related to employee stock transactions 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 1.93%. This is a result of the debt issuance costs, which reduce the carrying value of the convertible debt instruments. The debt issuance costs are amortized as interest expense. The expense for the amortization of debt issuance costs is a non-cash item, and we believe the exclusion of this interest expense will provide for a more useful comparison of our 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, employer taxes related to employee stock transactions, amortization of acquired intangible assets, and acquisition-related expenses. 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 issuance costs, stock-based compensation expense, employer taxes related to employee stock transactions, amortization of acquired intangible assets, and acquisition-related expenses. 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 and market positioning. 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 Annual Report Form 10-K filed with the Securities and Exchange Commission (SEC) on March 19, 2021. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended April 30, 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.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share data)

(unaudited)

Three Months Ended April 30,

2021 2020

Revenue $ 63,591 $ 49,786

Cost of revenue^(1) 10,418 6,963

Gross profit 53,173 42,823

Operating expenses:

Research and development^(1) 20,599 15,014

Sales and marketing^(1) 37,234 26,736

General and administrative^(1) 16,578 13,673

Total operating expenses 74,411 55,423

Loss from operations (21,238 ) (12,600 )

Interest income 818 1,353

Interest expense (1,317 ) -

Other (expense) income, net (616 ) 19

Loss before provision for income taxes (22,353 ) (11,228 )

Provision for income taxes (205 ) (231 )

Net loss $ (22,558 ) $ (11,459 )

Other comprehensive (loss) income

Unrealized loss (gain) on investments (204 ) 642

Total comprehensive loss $ (22,762 ) $ (10,817 )

Net loss per share, basic and diluted $ (0.27 ) $ (0.15 )

Weighted-average shares used in calculating net loss 82,915 77,770 per share, basic and diluted

(1) Includes stock-based compensation expense as follows:

Three Months Ended April 30,

2021 2020

Cost of revenue $ 676 $ 344

Research and development 4,440 2,183

Sales and marketing 3,954 2,285

General and administrative 4,542 3,496

Total $ 13,612 $ 8,308

PagerDuty, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

As of April 30, 2021

As of January 31, 2021

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

326,033

$

339,166

Investments

230,932

221,112

Accounts receivable, net of allowance for doubtful accounts of $1,072 and $1,188 as of April 30, 2021 and January 31, 2021, respectively

37,572

55,119

Deferred contract costs, current

12,870

12,330

Prepaid expenses and other current assets

12,287

10,587

Total current assets

619,694

638,314

Property and equipment, net

13,501

12,639

Deferred contract costs, non-current

19,199

19,257

Lease right-of-use assets

23,594

24,691

Goodwill

72,126

72,126

Intangible assets, net

25,758

26,633

Other assets

1,483

1,783

Total assets

$

775,355

$

795,443

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

4,150

$

5,747

Accrued expenses and other current liabilities

11,676

9,627

Accrued compensation

23,961

28,372

Deferred revenue, current

120,085

123,686

Lease liabilities, current

5,390

5,262

Total current liabilities

165,262

172,694

Convertible senior notes, net

279,703

217,528

Deferred revenue, non-current

5,971

6,286

Lease liabilities, non-current

25,278

26,542

Other liabilities

5,085

5,666

Total liabilities

481,299

428,716

Stockholders' equity:

Common stock

-

-

Additional paid-in-capital

557,843

614,494

Accumulated other comprehensive income

139

343

Accumulated deficit

(263,926

)

(248,110

)

Total stockholders' equity

294,056

366,727

Total liabilities and stockholders' equity

$

775,355

$

795,443

PagerDuty, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

As of April As of 30, 2021 January 31, 2021

(unaudited)

Assets

Current assets:

Cash and cash equivalents $ 326,033 $ 339,166

Investments 230,932 221,112

Accounts receivable, net of allowance for doubtfulaccounts of $1,072 and $1,188 as of April 30, 2021 37,572 55,119 and January 31, 2021, respectively

Deferred contract costs, current 12,870 12,330

Prepaid expenses and other current assets 12,287 10,587

Total current assets 619,694 638,314

Property and equipment, net 13,501 12,639

Deferred contract costs, non-current 19,199 19,257

Lease right-of-use assets 23,594 24,691

Goodwill 72,126 72,126

Intangible assets, net 25,758 26,633

Other assets 1,483 1,783

Total assets $ 775,355 $ 795,443

Liabilities and stockholders' equity

Current liabilities:

Accounts payable $ 4,150 $ 5,747

Accrued expenses and other current liabilities 11,676 9,627

Accrued compensation 23,961 28,372

Deferred revenue, current 120,085 123,686

Lease liabilities, current 5,390 5,262

Total current liabilities 165,262 172,694

Convertible senior notes, net 279,703 217,528

Deferred revenue, non-current 5,971 6,286

Lease liabilities, non-current 25,278 26,542

Other liabilities 5,085 5,666

Total liabilities 481,299 428,716

Stockholders' equity:

Common stock - -

Additional paid-in-capital 557,843 614,494

Accumulated other comprehensive income 139 343

Accumulated deficit (263,926 ) (248,110 )

Total stockholders' equity 294,056 366,727

Total liabilities and stockholders' equity $ 775,355 $ 795,443

PagerDuty, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended April 30,

2021

2020

Cash flows from operating activities

Net loss

$

(22,558

)

$

(11,459

)

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

Depreciation and amortization

1,972

1,023

Amortization of deferred contract costs

3,250

2,440

Amortization of debt issuance costs

438

-

Stock-based compensation

13,612

8,308

Non-cash lease expense

1,097

1,089

Other

803

743

Changes in operating assets and liabilities:

Accounts receivable

17,365

(8

)

Deferred contract costs

(3,732

)

(2,856

)

Prepaid expenses and other assets

(1,573

)

(2,919

)

Accounts payable

(1,564

)

(1,049

)

Accrued expenses and other liabilities

1,932

619

Accrued compensation

(4,411

)

1,000

Deferred revenue

(3,916

)

3,877

Lease liabilities

(1,136

)

(993

)

Net cash provided by (used in) operating activities

1,579

(185

)

Cash flows from investing activities

Purchases of property and equipment

(927

)

(2,713

)

Capitalization of internal-use software costs

(1,002

)

-

Payments related to a business acquisition

(160

)

-

Proceeds from maturities of held-to-maturity of investments

-

15,000

Purchases of available-for-sale investments

(77,531

)

(32,130

)

Proceeds from maturities of available-for-sale investments

67,004

30,565

Proceeds from sales of available-for-sale investments

-

3,096

Net cash (used in) provided by investing activities

(12,616

)

13,818

Cash flows from financing activities

Proceeds from issuance of common stock upon exercise of stock options

2,834

1,844

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

(4,930

)

(46

)

Net cash (used in) provided by financing activities

(2,096

)

1,798

Net increase in cash, cash equivalents, and restricted cash

(13,133

)

15,431

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

339,166

124,024

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

$

326,033

$

139,455

PagerDuty, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended April 30,

2021 2020

Cash flows from operating activities

Net loss $ (22,558 ) $ (11,459 )

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

Depreciation and amortization 1,972 1,023

Amortization of deferred contract costs 3,250 2,440

Amortization of debt issuance costs 438 -

Stock-based compensation 13,612 8,308

Non-cash lease expense 1,097 1,089

Other 803 743

Changes in operating assets and liabilities:

Accounts receivable 17,365 (8 )

Deferred contract costs (3,732 ) (2,856 )

Prepaid expenses and other assets (1,573 ) (2,919 )

Accounts payable (1,564 ) (1,049 )

Accrued expenses and other liabilities 1,932 619

Accrued compensation (4,411 ) 1,000

Deferred revenue (3,916 ) 3,877

Lease liabilities (1,136 ) (993 )

Net cash provided by (used in) operating activities 1,579 (185 )

Cash flows from investing activities

Purchases of property and equipment (927 ) (2,713 )

Capitalization of internal-use software costs (1,002 ) -

Payments related to a business acquisition (160 ) -

Proceeds from maturities of held-to-maturity of - 15,000 investments

Purchases of available-for-sale investments (77,531 ) (32,130 )

Proceeds from maturities of available-for-sale 67,004 30,565 investments

Proceeds from sales of available-for-sale investments - 3,096

Net cash (used in) provided by investing activities (12,616 ) 13,818

Cash flows from financing activities

Proceeds from issuance of common stock upon exercise 2,834 1,844 of stock options

Employee payroll taxes paid related to net share (4,930 ) (46 )settlement of restricted stock units

Net cash (used in) provided by financing activities (2,096 ) 1,798

Net increase in cash, cash equivalents, and (13,133 ) 15,431 restricted cash

Cash, cash equivalents, and restricted cash at 339,166 124,024 beginning of period

Cash, cash equivalents, and restricted cash at end of $ 326,033 $ 139,455 period

PagerDuty, Inc.

Reconciliation of GAAP to Non-GAAP Data

(in thousands, except percentages and per share data)

(unaudited)

Three Months Ended April 30,

2021

2020

Reconciliation of gross profit and gross margin

GAAP gross profit

$

53,173

$

42,823

Plus: Share-based compensation

676

344

Plus: Employer taxes related to employee stock transactions

26

1

Plus: Amortization of acquired intangible assets

280

-

Non-GAAP gross profit

$

54,155

$

43,168

GAAP gross margin

83.6

%

86.0

%

Non-GAAP adjustments

1.6

%

0.7

%

Non-GAAP gross margin

85.2

%

86.7

%

Reconciliation of operating expenses

GAAP research and development

$

20,599

$

15,014

Less: Share-based compensation

(4,440

)

(2,183

)

Less: Employer taxes related to employee stock transactions

(198

)

(45

)

Less: Acquisition-related expenses

(449

)

-

Non-GAAP research and development

$

15,512

$

12,786

GAAP sales and marketing

$

37,234

$

26,736

Less: Share-based compensation

(3,954

)

(2,285

)

Less: Employer taxes related to employee stock transactions

(201

)

(78

)

Less: Amortization of acquired intangible assets

(595

)

-

Non-GAAP sales and marketing

$

32,484

$

24,373

GAAP general and administrative

$

16,578

$

13,673

Less: Share-based compensation

(4,542

)

(3,496

)

Less: Employer taxes related to employee stock transactions

(256

)

(26

)

Less: Acquisition-related expenses

(10

)

-

Non-GAAP general and administrative

$

11,770

$

10,151

Reconciliation of operating loss and operating margin

GAAP operating loss

$

(21,238

)

$

(12,600

)

Plus: Share-based compensation

13,612

8,308

Plus: Employer taxes related to employee stock transactions

681

150

Plus: Amortization of acquired intangible assets

875

-

Plus: Acquisition-related expenses

459

-

Non-GAAP operating loss

$

(5,611

)

$

(4,142

)

GAAP operating margin

(33.4

)%

(25.3

)%

Non-GAAP adjustments

24.6

%

17.0

%

Non-GAAP operating margin

(8.8

)%

(8.3

)%

Reconciliation of net loss

GAAP net loss

$

(22,558

)

$

(11,459

)

Plus: Share-based compensation

13,612

8,308

Plus: Employer taxes related to employee stock transactions

681

150

Plus: Amortization of debt issuance costs

438

-

Plus: Amortization of acquired intangible assets

875

-

Plus: Acquisition-related expenses

459

-

Non-GAAP net loss

$

(6,493

)

$

(3,001

)

Reconciliation of net loss per share, basic and diluted

GAAP net loss per share, basic and diluted

$

(0.27

)

$

(0.15

)

Non-GAAP adjustments to net loss

0.19

0.11

Non-GAAP net loss per share, basic and diluted

$

(0.08

)

$

(0.04

)

Weighted-average shares used in calculating net loss per share, basic and diluted

82,915

77,770

__________

Note: Certain figures 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 April 30,

2021 2020

Reconciliation of gross profit and gross margin

GAAP gross profit $ 53,173 $ 42,823

Plus: Share-based compensation 676 344

Plus: Employer taxes related to employee stock 26 1 transactions

Plus: Amortization of acquired intangible assets 280 -

Non-GAAP gross profit $ 54,155 $ 43,168

GAAP gross margin 83.6 % 86.0 %

Non-GAAP adjustments 1.6 % 0.7 %

Non-GAAP gross margin 85.2 % 86.7 %



Reconciliation of operating expenses

GAAP research and development $ 20,599 $ 15,014

Less: Share-based compensation (4,440 ) (2,183 )

Less: Employer taxes related to employee stock (198 ) (45 )transactions

Less: Acquisition-related expenses (449 ) -

Non-GAAP research and development $ 15,512 $ 12,786



GAAP sales and marketing $ 37,234 $ 26,736

Less: Share-based compensation (3,954 ) (2,285 )

Less: Employer taxes related to employee stock (201 ) (78 )transactions

Less: Amortization of acquired intangible assets (595 ) -

Non-GAAP sales and marketing $ 32,484 $ 24,373



GAAP general and administrative $ 16,578 $ 13,673

Less: Share-based compensation (4,542 ) (3,496 )

Less: Employer taxes related to employee stock (256 ) (26 )transactions

Less: Acquisition-related expenses (10 ) -

Non-GAAP general and administrative $ 11,770 $ 10,151



Reconciliation of operating loss and operating margin

GAAP operating loss $ (21,238 ) $ (12,600 )

Plus: Share-based compensation 13,612 8,308

Plus: Employer taxes related to employee stock 681 150 transactions

Plus: Amortization of acquired intangible assets 875 -

Plus: Acquisition-related expenses 459 -

Non-GAAP operating loss $ (5,611 ) $ (4,142 )

GAAP operating margin (33.4 ) (25.3 ) % %

Non-GAAP adjustments 24.6 % 17.0 %

Non-GAAP operating margin (8.8 ) (8.3 ) % %



Reconciliation of net loss

GAAP net loss $ (22,558 ) $ (11,459 )

Plus: Share-based compensation 13,612 8,308

Plus: Employer taxes related to employee stock 681 150 transactions

Plus: Amortization of debt issuance costs 438 -

Plus: Amortization of acquired intangible assets 875 -

Plus: Acquisition-related expenses 459 -

Non-GAAP net loss $ (6,493 ) $ (3,001 )



Reconciliation of net loss per share, basic and diluted

GAAP net loss per share, basic and diluted $ (0.27 ) $ (0.15 )

Non-GAAP adjustments to net loss 0.19 0.11

Non-GAAP net loss per share, basic and diluted $ (0.08 ) $ (0.04 )



Weighted-average shares used in calculating net loss 82,915 77,770per share, basic and diluted

__________

Note: Certain figures 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 April 30,

2021 2020

Net cash provided by (used in) operating $ 1,579 $ (185 )activities

Less:

Purchases of property and equipment (927 ) (2,713 )

Capitalization of internal-use software costs (1,002 ) -

Free cash flow $ (350 ) $ (2,898 )

Net cash (used in) provided by investing $ (12,616 ) $ 13,818 activities

Net cash (used in) provided by financing $ (2,096 ) $ 1,798 activities

Free cash flow margin (0.6 )% (5.8 )%

View source version on businesswire.com: https://www.businesswire.com/news/home/20210603006002/en/

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

CONTACT: SOURCE PagerDuty