10-Q 1 pd-20220430.htm 10-Q pd-20220430
00015681001/312023Q1falsehttp://fasb.org/us-gaap/2021-01-31#AccountingStandardsUpdate202006Member0.024950700015681002022-02-012022-04-3000015681002022-05-31xbrli:shares00015681002022-04-30iso4217:USD00015681002022-01-3100015681002021-02-012021-04-30iso4217:USDxbrli:shares0001568100us-gaap:CommonStockMember2022-01-310001568100us-gaap:AdditionalPaidInCapitalMember2022-01-310001568100us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-310001568100us-gaap:RetainedEarningsMember2022-01-310001568100us-gaap:CommonStockMember2022-02-012022-04-300001568100us-gaap:AdditionalPaidInCapitalMember2022-02-012022-04-300001568100us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-02-012022-04-300001568100us-gaap:RetainedEarningsMember2022-02-012022-04-300001568100us-gaap:CommonStockMember2022-04-300001568100us-gaap:AdditionalPaidInCapitalMember2022-04-300001568100us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-300001568100us-gaap:RetainedEarningsMember2022-04-300001568100us-gaap:CommonStockMember2021-01-310001568100us-gaap:AdditionalPaidInCapitalMember2021-01-310001568100us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-310001568100us-gaap:RetainedEarningsMember2021-01-3100015681002021-01-3100015681002020-02-012021-01-310001568100us-gaap:AdditionalPaidInCapitalMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-01-310001568100us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-01-310001568100srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-01-310001568100us-gaap:CommonStockMember2021-02-012021-04-300001568100us-gaap:AdditionalPaidInCapitalMember2021-02-012021-04-300001568100us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-02-012021-04-300001568100us-gaap:RetainedEarningsMember2021-02-012021-04-300001568100us-gaap:CommonStockMember2021-04-300001568100us-gaap:AdditionalPaidInCapitalMember2021-04-300001568100us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-300001568100us-gaap:RetainedEarningsMember2021-04-3000015681002021-04-30pd:segment0001568100us-gaap:USTreasurySecuritiesMember2022-04-300001568100us-gaap:USTreasurySecuritiesMember2022-01-310001568100us-gaap:CommercialPaperMember2022-04-300001568100us-gaap:CommercialPaperMember2022-01-310001568100us-gaap:CorporateDebtSecuritiesMember2022-04-300001568100us-gaap:CorporateDebtSecuritiesMember2022-01-31pd:security00015681002021-02-012022-01-310001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2022-04-300001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2022-04-300001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel3Member2022-04-300001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2022-04-300001568100us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-04-300001568100us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-04-300001568100us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-04-300001568100us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-04-300001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CommercialPaperMember2022-04-300001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Member2022-04-300001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel3Member2022-04-300001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2022-04-300001568100us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-04-300001568100us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-04-300001568100us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-04-300001568100us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-04-300001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-04-300001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-04-300001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-04-300001568100us-gaap:FairValueMeasurementsRecurringMember2022-04-300001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2022-01-310001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2022-01-310001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel3Member2022-01-310001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2022-01-310001568100us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-01-310001568100us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-01-310001568100us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-01-310001568100us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-01-310001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CommercialPaperMember2022-01-310001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Member2022-01-310001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel3Member2022-01-310001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2022-01-310001568100us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-01-310001568100us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-01-310001568100us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-01-310001568100us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-01-310001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-01-310001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-01-310001568100us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-01-310001568100us-gaap:FairValueMeasurementsRecurringMember2022-01-310001568100pd:CatalyticMember2022-03-082022-03-080001568100pd:CatalyticMember2022-03-080001568100pd:CatalyticMemberus-gaap:DevelopedTechnologyRightsMember2022-03-080001568100pd:CatalyticMemberus-gaap:DevelopedTechnologyRightsMember2022-03-082022-03-080001568100us-gaap:CustomerRelationshipsMemberpd:CatalyticMember2022-03-080001568100us-gaap:CustomerRelationshipsMemberpd:CatalyticMember2022-03-082022-03-080001568100pd:RundeckIncMember2022-03-080001568100pd:RundeckIncMember2022-03-082022-03-080001568100us-gaap:CustomerRelationshipsMember2022-04-300001568100us-gaap:CustomerRelationshipsMember2022-02-012022-04-300001568100us-gaap:DevelopedTechnologyRightsMember2022-04-300001568100us-gaap:DevelopedTechnologyRightsMember2022-02-012022-04-300001568100us-gaap:TrademarksMember2022-04-300001568100us-gaap:TrademarksMember2022-02-012022-04-300001568100us-gaap:CustomerRelationshipsMember2022-01-310001568100us-gaap:CustomerRelationshipsMember2021-02-012021-04-300001568100us-gaap:DevelopedTechnologyRightsMember2022-01-310001568100us-gaap:DevelopedTechnologyRightsMember2021-02-012021-04-300001568100us-gaap:TrademarksMember2022-01-310001568100us-gaap:TrademarksMember2021-02-012021-04-300001568100us-gaap:LeaseholdImprovementsMember2022-04-300001568100us-gaap:LeaseholdImprovementsMember2022-01-310001568100us-gaap:ComputerEquipmentMember2022-04-300001568100us-gaap:ComputerEquipmentMember2022-01-310001568100us-gaap:FurnitureAndFixturesMember2022-04-300001568100us-gaap:FurnitureAndFixturesMember2022-01-310001568100us-gaap:SoftwareDevelopmentMember2022-04-300001568100us-gaap:SoftwareDevelopmentMember2022-01-310001568100us-gaap:ConstructionInProgressMember2022-04-300001568100us-gaap:ConstructionInProgressMember2022-01-310001568100us-gaap:SoftwareDevelopmentMember2022-02-012022-04-30xbrli:pure0001568100us-gaap:ConvertibleDebtMember2020-06-250001568100us-gaap:ConvertibleDebtMember2020-06-252020-06-250001568100us-gaap:ConvertibleDebtMemberpd:DebtConversionTermsOneMember2020-06-252020-06-25pd:day0001568100us-gaap:ConvertibleDebtMemberpd:DebtConversionTermsTwoMember2020-06-252020-06-250001568100us-gaap:ConvertibleDebtMemberus-gaap:DebtInstrumentRedemptionPeriodOneMember2020-06-252020-06-250001568100us-gaap:DebtInstrumentRedemptionPeriodTwoMemberus-gaap:ConvertibleDebtMember2020-06-252020-06-250001568100us-gaap:ConvertibleDebtMember2022-04-300001568100us-gaap:ConvertibleDebtMember2022-01-310001568100us-gaap:ConvertibleDebtMember2022-02-012022-04-300001568100us-gaap:ConvertibleDebtMember2021-02-012021-04-300001568100us-gaap:CallOptionMemberus-gaap:ConvertibleDebtMember2020-06-252020-06-250001568100us-gaap:CallOptionMemberus-gaap:ConvertibleDebtMember2020-06-2500015681002020-06-252020-06-2500015681002022-05-012022-04-30pd:equityIncentivePlan0001568100pd:EmployeeStockOptionRestrictedStockUnitsRSUAndPerformanceStockUnitsPSUMember2022-04-300001568100us-gaap:EmployeeStockMember2022-04-300001568100us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2022-02-012022-04-300001568100us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2021-02-012021-04-300001568100srt:MaximumMemberus-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2021-02-012021-04-300001568100us-gaap:EmployeeStockOptionMember2022-02-012022-04-300001568100us-gaap:RestrictedStockUnitsRSUMember2022-01-310001568100us-gaap:RestrictedStockUnitsRSUMember2022-02-012022-04-300001568100us-gaap:RestrictedStockUnitsRSUMember2022-04-300001568100srt:MaximumMemberus-gaap:PerformanceSharesMember2022-03-080001568100us-gaap:PerformanceSharesMember2022-01-310001568100us-gaap:PerformanceSharesMember2022-02-012022-04-300001568100us-gaap:PerformanceSharesMember2022-04-300001568100srt:MinimumMember2022-04-300001568100srt:MaximumMemberus-gaap:PerformanceSharesMember2022-04-300001568100us-gaap:EmployeeStockMember2019-04-112019-04-11pd:purchase_period0001568100us-gaap:EmployeeStockMember2022-02-012022-04-300001568100us-gaap:EmployeeStockMember2021-02-012021-04-300001568100us-gaap:CostOfSalesMember2022-02-012022-04-300001568100us-gaap:CostOfSalesMember2021-02-012021-04-300001568100us-gaap:ResearchAndDevelopmentExpenseMember2022-02-012022-04-300001568100us-gaap:ResearchAndDevelopmentExpenseMember2021-02-012021-04-300001568100us-gaap:SellingAndMarketingExpenseMember2022-02-012022-04-300001568100us-gaap:SellingAndMarketingExpenseMember2021-02-012021-04-300001568100us-gaap:GeneralAndAdministrativeExpenseMember2022-02-012022-04-300001568100us-gaap:GeneralAndAdministrativeExpenseMember2021-02-012021-04-300001568100us-gaap:StockCompensationPlanMember2022-02-012022-04-300001568100us-gaap:StockCompensationPlanMember2021-02-012021-04-300001568100us-gaap:ConvertibleDebtSecuritiesMember2022-02-012022-04-300001568100us-gaap:ConvertibleDebtSecuritiesMember2021-02-012021-04-300001568100pd:RestrictedStockIssuedInBusinessCombinationMember2022-02-012022-04-300001568100pd:RestrictedStockIssuedInBusinessCombinationMember2021-02-012021-04-300001568100us-gaap:EmployeeStockMember2022-02-012022-04-300001568100us-gaap:EmployeeStockMember2021-02-012021-04-300001568100country:US2022-02-012022-04-300001568100country:US2021-02-012021-04-300001568100us-gaap:NonUsMember2022-02-012022-04-300001568100us-gaap:NonUsMember2021-02-012021-04-300001568100pd:LongLivedAssetsMemberus-gaap:GeographicConcentrationRiskMembercountry:US2022-02-012022-04-300001568100pd:LongLivedAssetsMemberus-gaap:GeographicConcentrationRiskMembercountry:CA2022-02-012022-04-300001568100pd:LongLivedAssetsMemberus-gaap:GeographicConcentrationRiskMembercountry:US2021-02-012022-01-310001568100pd:LongLivedAssetsMemberus-gaap:GeographicConcentrationRiskMembercountry:CA2021-02-012022-01-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 10-Q
_________________________
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2022
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-38856
PAGERDUTY, INC.
(Exact name of registrant as specified in its charter)
_________________________
Delaware
27-2793871
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
600 Townsend St., Suite 200
San Francisco, CA 94103
(844) 800-3889
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
_________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $0.000005 par valuePDNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x No  o
Indicate by check mark whether the registrant has submitted electronically on its corporate Web site every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
o
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐   No  x
The total number of shares of common stock outstanding as of May 31, 2022, was 87,838,100.

PAGERDUTY, INC.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Part II - OTHER INFORMATION


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, or this Form 10-Q, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which statements involve substantial risk and uncertainties. All statements contained in this Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth and trends, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “likely,” “target,” and similar expressions are intended to identify forward-looking statements.
Forward-looking statement contained in this Form 10-Q include, but are not limited to, statements about our expectations regarding:
•the effect of uncertainties related to the novel coronavirus and resulting 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;
•trends in key business metrics, including number of customers and dollar-based net retention rate, and non-GAAP financial measures and their usefulness in evaluating our business;
•trends in revenue, cost of revenue, and gross margin;
•trends in operating expenses, including research and development, sales and marketing, and general and administrative expense, and expectations regarding these expenses as a percentage of revenue;
•our existing cash and cash equivalents and cash provided by sales of our subscriptions being sufficient to support working capital and capital expenditures for at least the next 12 months;
•our ability to successfully identify, acquire, and integrate complementary companies, technologies, and assets;
•our ability to service the interest on our convertible notes and repay such notes, to the extent required;
•our efforts to maintain proper and effective internal controls;
•our ability to expand our operations and increase adoption of our platform internationally;
•our ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to our business both in the United States and internationally;
•the increased expenses and administrative workload associated with being a public company; and
•other statements regarding our future operations, financial condition, and prospects and business strategies.
Such forward-looking statements are based on our expectations as of the date of this filing and are subject to a number of risks, uncertainties and assumptions, including but not limited to, risks detailed in the “Risk Factors” section of this Form 10-Q and in our Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made in this Form 10-Q and in other documents we file from time to time with the Securities and Exchange Commission, or the SEC, that disclose risks and uncertainties that may affect our business. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely on forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or may not occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. In addition, the forward-looking statements in this Form 10-Q are made as of the date of this filing, and we do not undertake, and expressly disclaim any duty, to update any of these forward-looking statements for any reason after the date of this Form 10-Q or to conform these statements to actual results or revised expectations.

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
PAGERDUTY, INC.
Condensed Consolidated Balance Sheets
(in thousands)
As of April 30, 2022As of January 31, 2022
(unaudited)
Assets
Current assets:
Cash and cash equivalents$273,859 $349,785 
Investments193,600 193,571 
Accounts receivable, net of allowance for credit losses of $2,340 and $1,809 as of April 30, 2022 and January 31, 2022, respectively
60,114 75,279 
Deferred contract costs, current17,060 16,672 
Prepaid expenses and other current assets13,284 9,777 
Total current assets557,917 645,084 
Property and equipment, net17,946 18,229 
Deferred contract costs, non-current26,304 26,159 
Lease right-of-use assets19,082 20,227 
Goodwill119,262 72,126 
Intangible assets, net43,092 23,133 
Other assets1,092 1,490 
Total assets$784,695 $806,448 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$9,320 $9,505 
Accrued expenses and other current liabilities14,195 13,640 
Accrued compensation27,769 35,327 
Deferred revenue, current162,893 162,881 
Lease liabilities, current5,741 5,637 
Total current liabilities219,918 226,990 
Convertible senior notes, net281,515 281,069 
Deferred revenue, non-current4,416 7,343 
Lease liabilities, non-current19,415 20,912 
Other liabilities3,273 3,159 
Total liabilities528,537 539,473 
Commitments and contingencies (Note 11)
Stockholders’ equity:
Common stock
— — 
Additional paid-in capital639,318 616,467 
Accumulated other comprehensive loss(1,517)(669)
Accumulated deficit(381,643)(348,823)
Total stockholders’ equity256,158 266,975 
Total liabilities and stockholders’ equity
$784,695 $806,448 
See Notes to Condensed Consolidated Financial Statements
5
PAGERDUTY, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except per share data)
(unaudited)

Three Months Ended April 30,
20222021
Revenue$85,371 $63,591 
Cost of revenue15,716 10,418 
Gross profit69,655 53,173 
Operating expenses:
Research and development31,289 20,599 
Sales and marketing45,552 37,234 
General and administrative25,271 16,578 
Total operating expenses102,112 74,411 
Loss from operations(32,457)(21,238)
Interest income548 818 
Interest expense(1,325)(1,317)
Other expense, net(790)(616)
Loss before benefit from (provision for) income taxes(34,024)(22,353)
Benefit from (provision for) income taxes1,204 (205)
Net loss$(32,820)$(22,558)
Other comprehensive (loss) income:
Unrealized loss on investments(848)(204)
Total comprehensive loss$(33,668)$(22,762)
Net loss per share, basic and diluted$(0.38)$(0.27)
Weighted average shares used in calculating net loss per share, basic and diluted
87,127 82,915 
See Notes to Condensed Consolidated Financial Statements
6
PAGERDUTY, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands, except share data)
(unaudited)
Three Months Ended April 30, 2022
Common StockAdditional
Paid-in
Capital		Accumulated Other Comprehensive LossAccumulated
Deficit		Total
Stockholders’
Equity
SharesAmount
Balances as of January 31, 202286,758,380 $— $616,467 $(669)$(348,823)$266,975 
Issuance of common stock upon exercise of stock options745,764 — 3,806 — — 3,806 
Vesting of restricted stock units, net of employee payroll taxes
253,383 — (6,170)— — (6,170)
Other comprehensive loss— — — (848)— (848)
Stock-based compensation
— — 25,215 — — 25,215 
Net loss
— — — — (32,820)(32,820)
Balances as of April 30, 202287,757,527 $— $639,318 $(1,517)$(381,643)$256,158 



Three Months Ended April 30, 2021
Common StockAdditional
Paid-in
Capital		Accumulated Other Comprehensive Income (Loss)Accumulated
Deficit		Total
Stockholders’
Equity
SharesAmount
Balances as of January 31, 202182,882,424 $— $614,494 $343 $(248,110)$366,727 
Cumulative effect adjustment due to adoption of ASU 2020-06— — (68,478)— 6,742 (61,736)
Issuance of common stock upon exercise of stock options and restricted stock agreements536,593 — 2,843 — — 2,843 
Vesting of restricted stock units, net of employee payroll taxes174,135 — (4,930)— — (4,930)
Shares issued related to a business combination2,073 — — — — — 
Other comprehensive loss— — — (204)— (204)
Stock-based compensation— — 13,914 — — 13,914 
Net loss— — — — (22,558)(22,558)
Balances as of April 30, 202183,595,225 $— $557,843 $139 $(263,926)$294,056 



See Notes to Condensed Consolidated Financial Statements
7
PAGERDUTY, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended April 30,
20222021
Cash flows from operating activities
Net loss$(32,820)$(22,558)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization3,591 1,972 
Amortization of deferred contract costs4,465 3,250 
Amortization of debt issuance costs447 438 
Stock-based compensation24,909 13,612 
Non-cash lease expense1,145 1,097 
Tax benefit related to release of valuation allowance(1,330)— 
Other1,754 803 
Changes in operating assets and liabilities:
Accounts receivable15,262 17,365 
Deferred contract costs(4,998)(3,732)
Prepaid expenses and other assets(1,991)(1,573)
Accounts payable57 (1,564)
Accrued expenses and other liabilities(634)1,932 
Accrued compensation(7,678)(4,411)
Deferred revenue(3,771)(3,916)
Lease liabilities(1,393)(1,136)
Net cash (used in) provided by operating activities(2,985)1,579 
Cash flows from investing activities
Purchases of property and equipment(2,078)(927)
Capitalization of internal-use software costs(772)(1,002)
Business acquisition, net of cash acquired(66,262)(160)
Purchases of available-for-sale investments(41,685)(77,531)
Proceeds from maturities of available-for-sale investments40,440 67,004 
Net cash used in investing activities(70,357)(12,616)
Cash flows from financing activities
Proceeds from issuance of common stock upon exercise of stock options3,586 2,834 
Employee payroll taxes paid related to net share settlement of restricted stock units(6,170)(4,930)
Net cash used in financing activities(2,584)(2,096)
Net decrease in cash, cash equivalents, and restricted cash(75,926)(13,133)
Cash, cash equivalents, and restricted cash at beginning of period349,785 339,166 
Cash, cash equivalents, and restricted cash at end of period$273,859 $326,033 
Supplemental cash flow data:
Cash paid for income taxes$13 $62 
Non-cash investing and financing activities:
Purchase of property and equipment, accrued but not yet paid$1,436 $236 
Stock-based compensation capitalized in internal use software$306 $302 
Bonuses capitalized in internal use software$120 $— 
Receivables for cash in-transit on stock options$220 $— 

See Notes to Condensed Consolidated Financial Statements
8
PAGERDUTY, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Description of Business and Basis of Presentation
Description of Business
PagerDuty, Inc. was incorporated under the laws of the state of Delaware in May 2010.
PagerDuty is a digital operations management platform that manages urgent and mission-critical work for a modern, digital business. PagerDuty collects data and digital signals from virtually any software-enabled system or device and leverages powerful machine learning to correlate, process, and predict opportunities and issues. Using incident response, event management, and automation, the Company brings together the right people with the right information so they can resolve issues and act on opportunities in minutes or seconds from wherever they are.
As used herein, “PagerDuty”, “we”, “our”, “the Company” and similar terms include PagerDuty, Inc., unless the context indicates otherwise.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated balance sheet as of January 31, 2022 was derived from the audited consolidated financial statements as of that date but does not include all of the information and notes required by GAAP for complete financial statements. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended January 31, 2022, included in the Company’s Annual Report on Form 10-K, filed with the SEC.
The condensed consolidated financial statements include the results of PagerDuty, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.
In the opinion of management, the information contained herein reflects all adjustments necessary for a fair presentation of the Company’s financial position, results of operations and comprehensive loss, statements of stockholders’ equity, and cash flows. The results of operations for the three months ended April 30, 2022 are not necessarily indicative of the results to be expected for the full year ending January 31, 2023 or for any other interim period, or for any future year.
The Company’s fiscal year ends on January 31. References to fiscal 2023, for example, refer to the fiscal year ending January 31, 2023.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make, on an ongoing basis, estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates. The Company’s most significant estimates and judgments involve the period of benefit for amortizing deferred contract costs, the determination of the allowance for credit losses, the provision for income taxes, including the related valuation allowance and any uncertain tax positions, fair value of acquired assets and assumed liabilities, impairment of goodwill and intangible assets, and estimates related to our revenue recognition, such as the assessment of performance obligations in our revenue arrangements and the fair value assigned to each performance obligation,
9
PAGERDUTY, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
among others. Management bases its estimates on historical experience and on various other assumptions which management believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
2. Summary of Significant Accounting Policies
Concentrations of Risk and Significant Customers
The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, available-for-sale investments, and accounts receivable. All of the Company’s cash and cash equivalents and investments are invested in money market funds, U.S. Treasury securities, commercial paper, corporate debt securities, or U.S. Government agency securities that management believes to be of high credit quality.
No single customer accounted for 10% of the total accounts receivable balance as of April 30, 2022 or January 31, 2022. No single customer represented 10% or more of revenue for the three months ended April 30, 2022 or 2021.
Segment Information
The Company manages its operations and allocates resources as one operating segment. The Company’s chief operating decision maker (“CODM”) is its chief executive officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources. Refer to Note 16, “Geographic Information” for information regarding the Company's long-lived assets and revenue by geography.
Related Party Transactions
Certain members of the Company’s Board of Directors serve as directors of, or are executive officers of, and in some cases are investors in, companies that are customers or vendors of the Company. The Company recognized $1.2 million in accounts receivable associated with related parties as of April 30, 2022 and billed $1.2 million to entities associated with related parties during the three months ended April 30, 2022. Other related party transactions were not material for the three months ended April 30, 2022 and 2021.
Significant Accounting Policies
There have been no significant changes to our significant accounting policies as compared to those described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022.
Recently Adopted Accounting Pronouncements
In March 2022, the FASB issued Accounting Standard Update No. 2022-01 (“ASU 2021-08”), Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 (Revenue from Contracts with Customers). At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The ASU is part of the FASB's simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. The Company early adopted ASU 2022-01 as of February 1, 2022 using the prospective method. The adoption of the standard impacted the accounting for the acquisition of Catalytic, Inc. (“Catalytic”) requiring the Company to measure acquired contract assets and liabilities in accordance with ASC 606. The adoption of ASU 2021-08 did not have a material impact on the condensed consolidated financial statements.

3. Cash, Cash Equivalents, and Investments
Cash, cash equivalents, and investments consisted of the following:
10
PAGERDUTY, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
As of April 30, 2022As of January 31, 2022
(in thousands)
Cash and cash equivalents
Cash
$159,213 $268,091 
Money market funds
111,646 73,194 
Commercial paper— 5,500 
U.S. Treasury securities3,000 3,000 
Total cash and cash equivalents$273,859 $349,785 
Available-for-sale investments:
U.S. Treasury securities$40,940 $41,105 
Commercial paper
42,084 39,483 
Corporate debt securities
110,576 112,983 
Total available-for-sale investments$193,600 $193,571 
The following tables summarize the Company’s investments’ adjusted cost, net unrealized losses, and fair value by significant investment category as of April 30, 2022 and January 31, 2022. Gross realized gains or losses from sales of available-for-sale securities were not material for the three months ended April 30, 2022.
As of April 30, 2022
Cost BasisUnrealized Loss, NetRecorded Basis
(in thousands)
Available-for-sale investments:
U.S. Treasury securities$41,026 $(86)$40,940 
Commercial paper42,225 (141)42,084 
Corporate debt securities111,866 (1,290)110,576 
Total available-for-sale investments$195,117 $(1,517)$193,600 
As of January 31, 2022
Cost BasisUnrealized Loss, NetRecorded Basis
(in thousands)
Available-for-sale investments:
U.S. Treasury securities$41,147 $(42)$41,105 
Commercial paper39,528 (45)39,483 
Corporate debt securities113,565 (582)112,983 
Total available-for-sale investments$194,240 $(669)$193,571 
The following tables present the Company’s available-for-sale securities by contractual maturity date as of April 30, 2022 and January 31, 2022:
11
PAGERDUTY, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
As of April 30, 2022
Cost BasisRecorded Basis
(in thousands)
Due within one year$161,372 $160,607 
Due between one to five years33,745 32,993 
Total$195,117 $193,600 
As of January 31, 2022
Cost BasisRecorded Basis
(in thousands)
Due within one year$154,692 $154,455 
Due between one to five years39,548 39,116 
Total$194,240 $193,571 
As of April 30, 2022, there were 74 available-for-sale securities in an unrealized loss position, eight of which were in a continuous unrealized loss position for the last 12 months. The total unrealized loss related to the eight securities was $0.1 million. As of January 31, 2022, there were 69 available-for-sale securities in an unrealized loss position, seven of which were in a continuous unrealized loss position for the last 12 months. The total unrealized loss related to the seven securities was $0.7 million.
When evaluating investments for impairment, the Company reviews factors such as the extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, and the Company’s intent to sell, or whether it is more likely than not that the Company will be required to sell, the investment before recovery of the investment’s amortized cost. No impairment loss has been recorded on the securities included in the tables above, as the Company believes that any decrease in fair value of these securities is temporary and the Company expects to recover at least up to the initial cost of the investment for these securities. The Company has not recorded an allowance for credit losses, as the Company believes any such losses would be immaterial based on the high-grade credit rating for each of its marketable securities as of the end of each period.

4. Fair Value Measurements
The Company measures its financial assets and liabilities at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value, as follows:
Level 1—Valuations based on observable inputs that reflect quoted prices for identical assets or liabilities in active markets.
Level 2—Valuations based on inputs that are directly or indirectly observable in the marketplace.
Level 3—Valuations based on unobservable inputs that are supported by little or no market activity.
The following tables present information about the Company’s financial assets that are required to be measured or disclosed at fair value using the above input categories:
12
PAGERDUTY, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
As of April 30, 2022
Level 1Level 2Level 3Total
(in thousands)
Money market funds$111,646 $— $— $111,646 
U.S. Treasury securities3,000 40,940 — 43,940 
Commercial paper— 42,084 — 42,084 
Corporate debt securities— 110,576 — 110,576 
Total$114,646 $193,600 $— $308,246 
Included in cash equivalents$114,646 
Included in investments$193,600 
As of January 31, 2022
Level 1Level 2Level 3Total
(in thousands)
Money market funds$73,194 $— $— $73,194 
U.S. Treasury securities3,000 41,105 — 44,105 
Commercial paper5,500 39,483 — 44,983 
Corporate debt securities— 112,983 — 112,983 
Total$81,694 $193,571 $— $275,265 
Included in cash equivalents$81,694 
Included in investments$193,571 
The Company’s assets that are measured by management at fair value on a recurring basis are generally classified within Level 1 or Level 2 of the fair value hierarchy.
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of April 30, 2022 and January 31, 2022, the Company’s Level 2 securities were priced by pricing vendors. These pricing vendors utilize observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs like market transactions involving identical or comparable securities.
The carrying amounts of certain financial instruments, including cash held in banks, accounts receivable, and accounts payable approximate fair value due to their short-term maturities and are excluded from the fair value table above.
Convertible Senior Notes
As of April 30, 2022, the estimated fair value of the Notes was approximately $307.2 million. The fair value was determined based on the quoted price for the Notes in an inactive market on the last trading day of the reporting period and is considered as Level 2 in the fair value hierarchy.

5. Business Combinations
On March 8, 2022, the Company completed the acquisition of Catalytic, a provider of no-code/low-code workflow automation application. The Company acquired Catalytic for purchase consideration of $68.8 million in cash. The acquisition was accounted for as a business combination and the acquired assets and liabilities were recorded at their preliminary fair values on the acquisition date and any excess was recorded as goodwill. The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of the date of this Quarterly Report on Form 10-Q and may be adjusted during the measurement period of up to 12 months from the date of acquisition as further information becomes available. Any changes in the fair values of the
13
PAGERDUTY, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill. As of April 30, 2022, the primary area that remains preliminary relates to the valuation of certain tax-related items.
The following table presents the preliminary fair values of acquired assets and liabilities recorded in the Company’s condensed consolidated balance sheet as of the acquisition date:
(in thousands)
Cash and cash equivalents$2,506 
Accounts receivable and other assets801 
Prepaid and other current assets441 
Intangible assets21,800 
Goodwill47,137 
Accounts payable and other liabilities(409)
Deferred revenue(856)
Other tax liabilities(1,322)
Deferred tax liability(1,330)
Total purchase consideration$68,768 
The goodwill was primarily attributed to the value of synergies created with the Company’s current and future offerings. Goodwill is not deductible for income tax purposes.
In connection with the acquisition, the Company recognized a net deferred tax liability for approximately $1.3 million, generated primarily from the difference between the tax basis and fair value of the acquired intangible assets, which increased goodwill. As the Company has a full valuation allowance as of April 30, 2022, the Company recorded an income tax benefit for this net deferred tax liability in the condensed consolidated statement of operations for the three months ended April 30, 2022. Refer to Note 15, "Income Taxes", for further information.
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:
Fair ValueUseful Life
(in thousands)(in years)
Developed technology$19,200 3
Customer relationships$2,600 10
This business combination resulted in increases of $47.1 million to goodwill, $19.2 million to developed technology and $2.6 million to customer relationships. The Company also entered into holdback agreements with the two founders of Catalytic with $3.4 million held back in cash which are subject to the recipients’ continued service with the Company and thus excluded from the purchase price and will be recognized ratably as research and development expense over the required two-year service period.
From the date of the acquisition, the financial results of Catalytic have been included in and are immaterial to the Company’s condensed consolidated financial statements. Pro forma revenue and results of operations have not been presented because the historical results are not material to the condensed consolidated financial statements in any period presented.
The Company did not complete any other acquisitions in the three months ended April 30, 2022.
14
PAGERDUTY, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
6. Goodwill and Acquired Intangible Assets
The changes in the carrying amount of goodwill for the three months ended April 30, 2022 are as follows:
Goodwill
(in thousands)
Balance as of January 31, 2022$72,126 
Goodwill resulting from business combination47,136 
Balance as of April 30, 2022$119,262 
Acquired intangible assets subject to amortization consist of the following:
As of April 30, 2022
CostAccumulated AmortizationNetWeighted Average
Remaining Useful Life
(in thousands)(in years)
Customer relationships$24,400 $(3,489)$20,911 8.4
Developed technology24,800 (2,702)22,098 3.4
Trademarks400 (317)83 0.4
Total acquired intangibles, net$49,600 $(6,508)$43,092 
As of January 31, 2022
CostAccumulated AmortizationNetWeighted Average
Remaining Useful Life
(in thousands)(in years)
Customer relationships$21,800 $(2,907)$18,893 8.7
Developed technology5,600 (1,493)4,107 3.7
Trademarks400 (267)133 0.7
Total acquired intangibles, net$27,800 $(4,667)$23,133 
For the three months ended April 30, 2022 and 2021, amortization expense related to intangible assets was $1.8 million and $0.9 million, respectively.
15
PAGERDUTY, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
7. Property and Equipment, Net
Property and equipment, net, consisted of the following:
As of April 30, 2022As of January 31, 2022
(in thousands)
Leasehold improvements$15,622 $15,392 
Computers and equipment8,347 7,483 
Furniture and fixtures4,508 4,686 
Capitalized internal-use software6,651 6,136 
Gross property and equipment (1)
35,128 33,697 
Accumulated depreciation and amortization(17,182)(15,468)
Property and equipment, net$17,946 $18,229 
(1) Gross property and equipment includes construction-in-progress for leasehold improvements and capitalized internal-use software of $2.0 million and $6.9 million that had not yet been placed in service as of April 30, 2022 and January 31, 2022, respectively. The costs associated with construction-in-progress are not amortized until the asset is available for its intended use.
Depreciation and amortization expense was $1.6 million and $1.0 million for the three months ended April 30, 2022 and 2021, respectively.
In the three months ended April 30, 2022, the Company recorded an impairment charge of $0.7 million on its capitalized internal-use software included in construction-in-progress. It was determined that the developed technology would not be placed in service as the technology was replaced with the acquired technology of Catalytic.

8. Deferred Contract Costs
Deferred contract costs, which primarily consist of deferred sales commissions, were $43.4 million and $42.8 million as of April 30, 2022 and January 31, 2022, respectively. Amortization expense for deferred contract costs was $4.5 million and $3.3 million for the three months ended April 30, 2022 and 2021, respectively. There was no impairment charge related to the costs capitalized for the periods presented.

9. Leases
Operating Leases
The Company has entered into various non-cancellable operating leases for its office spaces with lease periods expiring between fiscal 2023 and fiscal 2029. The operating lease agreements generally provide for rental payments on a graduated basis and for options to renew, which could increase future minimum lease payments if exercised.
Lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The lease right-of-use assets also include any lease payments made and exclude lease incentives such as tenant improvement allowances.
16
PAGERDUTY, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The operating leases typically include non-lease components such as common-area maintenance costs. The Company has elected to include non-lease components with lease payments for the purpose of calculating lease right-of-use assets and liabilities, to the extent that they are fixed. Non-lease components that are not fixed are expensed as incurred as variable lease payments.
Leases with a term of one year or less are not recognized on our condensed consolidated balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.
The following table presents information about leases on the condensed consolidated balance sheet.
As of April 30, 2022As of January 31, 2021
(in thousands)
Assets
Lease right-of-use assets$19,082 $20,227 
Liabilities
Lease liabilities5,741 5,637 
Lease liabilities, non-current19,415 20,912 
As of April 30, 2022, the weighted average remaining lease term was 4.6 years and the weighted average discount rate used to determine the net present value of the lease liabilities was 3.7%.
The following table presents information about leases on the condensed consolidated statement of operations.
Three Months Ended April 30,
20222021
(in thousands)
Operating lease expense$1,523 $1,369 
Short-term lease expense360 90
Variable lease expense314 113

The following table presents supplemental cash flow information about the Company’s leases.
Three Months Ended April 30,
20222021
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities$1,618 $1,572 

10. Debt and Financing Arrangements
Convertible Senior Notes
On June 25, 2020, the Company issued $287.5 million in aggregate principal amount of the Notes in a private offering pursuant to an Indenture dated June 25, 2020 (the “Indenture”). The total net proceeds from the debt offering, after deducting initial purchaser discounts and debt issuance costs, paid or payable by us, were $278.2 million.
The Notes are senior, unsecured obligations of the Company and accrue interest payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2021, at a rate of 1.25% per year. The Notes will mature on July 1, 2025, unless such notes are converted, redeemed or repurchased earlier. The Notes are
17
PAGERDUTY, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
convertible into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election in the manner and subject to the terms and conditions provided in the Indenture.
Holders of the Notes may convert all or any portion of their Notes at their option at any time prior to the close of business on April 1, 2025, only under the following circumstances:
•During any fiscal quarter commencing after the fiscal quarter ended October 31, 2020 (and only during such fiscal quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
•During the five business day period after any ten consecutive trading day period (the measurement period) in which the “trading price” (as defined in the Indenture) per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;
•If the Company calls such Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or
•Upon the occurrence of specified corporate events, as noted in the Indenture.
On or after April 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Notes may convert all or any portion of their Notes at any time, regardless of the foregoing circumstances.
The conversion rate will initially be 24.9507 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $40.08 per share of common stock. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the Indenture, but will not be adjusted for accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with a fundamental change, as defined in the Indenture.
The Company may not redeem the Notes prior to July 6, 2023. The Company may redeem for cash all or any portion of the Notes, at its option, on a redemption date occurring on or after July 6, 2023 and prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price of the common stock has been at least 130% of the conversion price for the Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes.
If the Company undergoes a fundamental change (as defined in the Indenture), holders may require the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding Notes may declare the entire principal of all the Notes plus accrued and unpaid interest to be immediately due and payable.
The Company accounts for the Notes as a single liability in accordance with ASU 2020-06 “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”.
18
PAGERDUTY, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
In accounting for the Notes after adoption of ASU 2020-06, the Notes are accounted for as a single liability, and the carrying amount of the Notes is $281.5 million as of April 30, 2022, with principal of $287.5 million, net of unamortized issuance costs of $6.0 million. The Notes were classified as long-term liabilities as of April 30, 2022. The issuance costs related to the Notes are being amortized to interest expense over the contractual term of the Notes at an effective interest rate of 1.93%.
The net carrying amount of the Notes as of April 30, 2022 and as of January 31, 2022 was as follows:
As of April 30, 2022As of January 31, 2022
(in thousands)
Principal$287,500 $287,500 
Less: unamortized issuance costs(5,985)(6,431)
Net carrying amount$281,515 $281,069 
Interest expense recognized related to the Notes is as follows:
Three Months Ended April 30,
20222021
(in thousands)
Contractual interest expense$878 $879 
Amortization of debt issuance costs447 438 
Total interest expense related to the Notes$1,325 $1,317 
Capped Call Transactions
In connection with the offering of the Notes, the Company entered into privately negotiated capped call transactions (the “Capped Calls”) with certain financial institution counterparties (the “Option Counterparties”). The Capped Calls are generally intended to reduce or offset the potential dilution to the common stock upon any conversion of the Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. For accounting purposes, the Capped Calls are separate transactions, and not part of the terms of the Notes. The Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $35.7 million incurred to purchase the Capped Calls were recorded as a reduction to additional paid-in capital in the accompanying condensed consolidated balance sheet.
The Capped Calls each have an initial strike price of approximately $40.08 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes. The Capped Calls have an initial cap price of $61.66 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, approximately 7.2 million shares of our common stock. The Capped Calls are subject to automatic exercise over a 40 trading day period commencing on May 2, 2025, subject to earlier termination under certain circumstances.

11. Commitments and Contingencies
Legal Matters
From time to time, the Company may be subject to various claims and other legal matters arising in the ordinary course of business. The Company accrues estimates for resolution of legal and other contingencies when losses are probable and estimable. The outcomes of legal proceedings are subject to significant uncertainties. The Company is not currently a party to any pending legal proceedings for which management believes the outcome, individually or in the aggregate, would have a material adverse effect on its business, operating results, cash flows, or financial condition.
19
Warranties and Indemnification
The Company has entered into service-level agreements with a portion of its customers defining levels of uptime reliability and performance and permitting those customers to receive credits if the Company fails to meet the defined levels of uptime. To date, the Company has not experienced any significant failures to meet defined levels of uptime reliability and performance as a result of those agreements and, as a result, the Company has not incurred or accrued any material liabilities related to these agreements in the financial statements.
In the ordinary course of business, we may agree to indemnify customers, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by us, or from intellectual property infringement claims made by third parties. As permitted under Delaware law, we have entered into indemnification agreements with our directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers, or employees. No demands have been made upon us to provide indemnification under such agreements, and there are no claims that we are aware of that could have a material effect on our consolidated balance sheets, consolidated statements of operations and comprehensive loss, or consolidated statements of cash flows.

12. Deferred Revenue and Performance Obligations
The following table presents the changes to the Company’s deferred revenue:
Three Months Ended April 30,
20222021
(in thousands)
Deferred revenue, beginning of period$170,224 $129,972 
Billings81,600 59,675 
Deferred revenue assumed in the Catalytic acquisition856 — 
Revenue recognized(85,371)(63,591)
Deferred revenue, end of period$167,309 $126,056 
For the three months ended April 30, 2022 and 2021, the majority of revenue recognized was from the deferred revenue balances at the beginning of each quarter.
As of April 30, 2022, future estimated revenue related to performance obligations for cloud-hosted and term-license software subscriptions with terms of more than one year that are unsatisfied or partially unsatisfied at the end of the reporting periods was approximately $141.4 million. The Company expects to satisfy the substantial majority of these unsatisfied performance obligations over the next 24 months and the remainder thereafter. The Company applied the optional exemption for subscriptions with terms of less than one year.

13. Common Stock and Stockholders’ Equity
Equity Incentive Plans
The Company has two equity incentive plans: the 2010 Stock Plan (the “2010 Plan”) and the 2019 Equity Incentive Plan (the “2019 Plan”, collectively the “Stock Plans”). Upon completion of the Company’s initial public offering (“IPO”) in April 2019, the Company ceased granting awards under the 2010 Plan, and all shares that remained available for future issuance under the 2010 Plan at that time were transferred to the 2019 Plan. The 2019 Plan superseded and replaced the 2010 Plan. As of April 30, 2022 and January 31, 2022, the Company was authorized to grant up to 27,895,454 shares and 23,343,378 shares of common stock, respectively, under the Stock Plans.
20
The Company currently uses authorized and unissued shares to satisfy stock award exercises and settlement of RSUs and PSUs. As of April 30, 2022 and January 31, 2022, there were 14,086,882 shares and 14,185,048 shares available for future issuance under the Stock Plans, respectively.
Shares of common stock reserved for future issuance are as follows:
April 30, 2022
Outstanding stock options and unvested RSUs and PSUs18,081,165 
Available for future stock option, RSU, and PSU grants14,086,882 
Available for ESPP3,466,655 
Total common stock reserved at April 30, 202235,634,702 
Stock Option Activity
Stock option activity is as follows:
Number of
Shares		Weighted
Average Exercise
Price		Weighted
Average
Remaining
Contractual Term		Aggregate
Intrinsic Value
(in thousands)
Outstanding at January 31, 20228,375,866 $9.28 6.1 years$198,828 
Granted24,882 $34.22 
Exercised(745,764)$5.10 
Canceled(38,747)$12.65 
Outstanding at April 30, 20227,616,237 $9.76 6.0 years$126,616 
Vested as of April 30, 20226,238,896 $7.61 5.6 years$117,088 
The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options on the date of grant. The Company accounts for forfeitures as they occur. The following assumptions were used to calculate the fair value of employee stock option grants made during the periods:
Three Months Ended April 30,
20222021
Expected dividend yield— %— %
Expected volatility47.1 %
43.8%
Expected term (years)
6.1
6.1
Risk-free interest rate
2.50%
1.16%
Stock options granted during the three months ended April 30, 2022 and 2021 had a weighted average grant date fair value of $16.46 and $17.80 per share, respectively. The aggregate intrinsic value of stock options exercised during the three months ended April 30, 2022 and 2021 was $21.3 million and $20.5 million, respectively.
The intrinsic value for options exercised is the difference between the market value of the stock and the exercise price of the stock option at the date of exercise.
As of April 30, 2022, there was approximately $15.7 million of total unrecognized compensation cost related to unvested stock options granted under the Stock Plans, which will be recognized over a weighted average period of 2.1 years.
Restricted Stock Units
21
A summary of the Company’s RSU activity and related information is as follows:
Number of RSUsWeighted
Average Grant Date Fair Value Per Share
Outstanding at January 31, 20226,028,201 $34.77 
Granted3,802,945 $34.22 
Vested(226,103)$30.15 
Forfeited or canceled(501,123)$33.05 
Outstanding at April 30, 20229,103,920 $34.75 
The fair value of RSUs is based on the fair value of the underlying shares on the date of grant. The Company accounts for forfeitures as they occur.
As of April 30, 2022, there was $293.9 million of unrecognized stock-based compensation expense related to unvested RSUs, which is expected to be recognized over a weighted average period of 3.2 years based on vesting under the award service conditions.
Performance Stock Units
On March 8, 2022, the Compensation Committee of the Board certified the results of PagerDuty’s operating plan for the fiscal year ended January 31, 2022. Based on the results, the PSUs granted in April 2021 (“2021 PSU Awards”) were earned at an attainment of 129%.
A summary of the Company’s PSU activity and related information is as follows:
Number of PSUsWeighted
Average Grant Date Fair Value Per Share
Outstanding at January 31, 2021117,701 $41.17 
Granted629,830 $34.22 
Vested(27,280)$41.17 
Forfeited or canceled(23,405)$41.17 
Performance adjustment for 2021 PSU Awards34,332 $41.17 
Outstanding at April 30, 2022731,178 $35.18 
The Company grants PSUs to certain employees of the Company for which the ultimate number of units that will vest are determined based on the achievement of performance at the end of the stated performance period. The performance condition is based on the level of achievement of a Company target related to PagerDuty’s operating plan. The PSUs vest over a three-year period, subject to continuous service with the Company. The number of shares of the Company’s stock that will vest based on the performance condition can range from 0% to 200% of the target amount. Compensation expense for PSUs with performance conditions is measured using the fair value at the date of grant and recorded over the vesting period under the graded-vesting attribution method, and may be adjusted over the vesting period based on interim estimates of performance against the performance condition.
During the three months ended April 30, 2022 and 2021, the Company recorded stock-based compensation expense for the number of PSUs considered probable of vesting based on the expected attainment of the performance targets.
As of April 30, 2022, total unrecognized stock-based compensation cost related to PSUs was $22.3 million. This unrecognized stock-based compensation cost is expected to be recognized using the accelerated attribution method over a weighted-average period of approximately 1.7 years.
22
Employee Stock Purchase Plan
In April 2019, the Board of Directors adopted and approved the 2019 ESPP, which became effective on April 11, 2019. The ESPP generally provides for 24-month offering periods beginning June 15 and December 15 of each year, with each offering period consisting of four six-month purchase periods. On each purchase date, eligible employees will purchase the shares at a price per share equal to 85% of the lesser of (1) the fair market value of the Company’s stock as of the beginning of the offering period or (2) the fair market value of the Company’s stock on the purchase date, as defined in the ESPP.
During the three months ended April 30, 2022 and 2021, the Company recognized $1.1 million and $1.8 million of stock-based compensation expense related to the ESPP, respectively.
During the three months ended April 30, 2022 and 2021, the Company withheld $5.7 million and $3.0 million in contributions from employees, respectively.
There were no purchases related to the ESPP during the three months ended April 30, 2022 and 2021.
Stock-Based Compensation
Stock-based compensation expense included in the Company’s condensed consolidated statements of operations is as follows:
Three Months Ended April 30,
20222021
(in thousands)
Cost of revenue$1,224 $676 
Research and development8,675 4,440 
Sales and marketing6,381 3,954 
General and administrative8,629 4,542 
Total$24,909 $13,612 

14. Net Loss per Share
The following table presents the calculation of basic and diluted net loss per share:
Three Months Ended April 30,
20222021
(in thousands, except per share data)
Numerator:
Net loss$(32,820)$(22,558)
Denominator:
Weighted average shares used in calculating net loss per share, basic and diluted
87,127 82,915 
Net loss per share, basic and diluted$(0.38)$(0.27)

Since the Company was in a loss position for the periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common stock outstanding would have been anti-dilutive.
23
Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:
As of April 30,
20222021
(in thousands)
Shares subject to outstanding common stock awards17,451 16,171 
Convertible senior notes7,173 7,173 
Restricted stock issued to Rundeck key personnel70 209 
Shares issuable pursuant to the 2019 employee stock purchase plan208 204 
Total24,902 23,757 

15. Income Taxes
The Company's provision for income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period.
The Company's quarterly tax provision, and estimate of its annual effective tax rate, is subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income (or loss) relates, changes in how the Company does business, and tax law developments. The Company's estimated effective tax rate for the year differs from the U.S. statutory rate of 21% as a result of our U.S. losses for which no benefit will be realized, our foreign operations which are subject to tax rates that differ from those in the U.S., as well as the benefit for non-U.S. income tax credits.
The Company recorded an income tax benefit of $1.2 million for the three months ended April 30, 2022, and income tax expense of $0.2 million for the three months ended April 30, 2021. The income tax benefit recorded in the three months ended April 30, 2022, was primarily due to a reduction in the Company’s valuation allowance from the increase in the deferred tax liability associated with the acquired intangible assets from the acquisition of Catalytic, resulting in a $1.3 million deferred tax benefit.


16. Geographic Information
Revenue by location is determined by the billing address of the customer. The following table sets forth revenue by geographic area:
Three Months Ended April 30,
20222021
(in thousands)
United States$64,766 $47,742 
International20,605 15,849 
Total$85,371 $63,591 
Other than the United States, no other individual country accounted for 10% or more of revenue for the three months ended April 30, 2022 or 2021. As of April 30, 2022, 86% of the Company’s long-lived assets, including property and equipment and right-of-use lease assets, were located in the United States, and 14% were located in
24
Canada. As of January 31, 2022, 86% of the Company’s long-lived assets, including property and equipment and right-of-use lease assets, were located in the United States and 14% were located in Canada.

17. Subsequent Events
The Company has evaluated subsequent events through June 3, 2022.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations together should be read in conjunction with our condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended January 31, 2022, filed with the SEC on March 17, 2022. You should review the sections titled “Special Note Regarding Forward-Looking Statements” above in this Quarterly Report on Form 10-Q for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Factors that could cause or contribute to such differences include, but are not limited to, impacts on our business and general economic conditions due to the current COVID-19 pandemic, those identified below, and those discussed in the section titled “Risk Factors” included in Part II, Item 1A below. The last day of our fiscal year is January 31. Our fiscal quarters end on April 30, July 31, October 31 and January 31.
Overview
PagerDuty is a digital operations management platform that manages urgent and mission critical work for a modern, digital enterprise. We empower teams to respond rapidly to incidents to resolve or avoid customer issues, reduce noise, predict and avoid performance degradation, improve productivity, and accelerate digital transformation.
Today, nearly every business is a digital business. As such, organizations are under pressure to enhance their digital operations in order to meet escalating customer expectations, resolve incidents proactively and free-up time for innovation projects. This means critical, time sensitive, and unpredictable work needs to be detected and orchestrated.
We collect data and digital signals from virtually any software-enabled system or device and leverage powerful machine learning to correlate, process, and predict opportunities and issues. Using incident response, event management, and automation, we bring together the right people with the right information so they can resolve issues and act on opportunities in minutes or seconds from wherever they are.
Since our founding in 2009, we have expanded our capabilities from a single product focused on on-call management for developers to a multi-product platform that crosses silos into IT operations, security, customer service, and executive stakeholder roles across the organization. We have evolved from an on-call tool into the platform for digital operations, which resides at the center of a company’s technology ecosystem.
We have spent more than a decade building deep product integrations to our platform, and our ecosystem now includes over 650 direct integrations to enable our customers to gather and correlate digital signals from virtually any software-enabled system or device. This allows technical teams to collect digital signals from any system or platform in their environment, and without the effects of context switching. Those same integrations connect with popular collaboration tools and business applications, as well as all types of technology stacks to drive automation of work.
We generate revenue primarily from cloud-hosted subscription fees. We also generate revenue from term-license software subscription fees. We have a land-and-expand business model that leads to viral adoption of our products and subsequent expansion. Our online self-service model is the primary mechanism for landing new customers and enabling teams to get started without assistance. We complement our self-service model with high-
25
velocity inside sales focused on small and medium businesses, a commercial team focused on mid-market customers, and a field sales team focused on enterprise customers. Our mid-market and enterprise customers account for the majority of our revenue today. These teams drive expansion to additional users, new use cases, and add-on products, as well as upsell to higher value plans.
COVID-19 Update
The COVID-19 pandemic continued during fiscal year 2023.While our revenues, billings, and earnings are relatively predictable as a result of our subscription-based business model and the majority of our revenues are generated from annual subscriptions, the effects of the COVID-19 pandemic may have a delayed impact on our results of operations. We continue to ascertain the long-term impact of the COVID-19 pandemic on our business. We continue to focus on supporting our employees, customers, and community.
As our offices begin to reopen, we expect to incur incremental expenses as we resume onsite services and related in-office costs. However, the majority of our employees continue to work remotely in order to minimize the spread of COVID-19 among our employee base and comply with local regulations within the United States and internationally. As we continue to monitor the local regulations related to COVID-19, we have begun to release travel restrictions on business-related travel, allowing certain employees to travel on a voluntary basis. We also continue to offer local employee assistance programs to employees if needed. These changes remain in effect and could extend into future quarters. The impact, if any, of these and any additional operational changes we may implement to facilitate remote work is uncertain, but changes we have implemented have not affected and are not expected to affect our ability to maintain operations, including financial reporting systems, internal control over financial reporting and disclosure controls and procedures.
Refer to Item 1A, “Risk Factors” for further discussion of the possible impact of the COVID-19 pandemic on our business.
Recent Events
We are closely monitoring the invasion of Ukraine by Russia in February 2022 and its global impacts. While the conflict is still unfolding and the outcome remains highly uncertain, we do not believe the Russia-Ukraine conflict will have a material impact on our business and results of operation. However, if the Russia-Ukraine conflict continues or worsens, leading to greater global economic disruptions and uncertainty, our business and results of operations could be materially impacted. Our customers in Russia represented an immaterial portion of our net assets and total consolidated revenue both as of and for the three months ended April 30, 2022 and January 31, 2022.

26
Key Business Metrics
We review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.
While these numbers are based on what we believe to be a reasonable representation of our customer base for the applicable period of measurement, we rely on a third party to validate legal entities, which uses the best available data at period end, and therefore is subject to change as new information becomes available. In addition, we are continually seeking to improve our methodology, which may result in future changes to our key metrics.
Our key metrics include the results of Catalytic, to the extent applicable, beginning on the acquisition date of March 8, 2022.
Number of Customers
We believe that the number of customers using our platform, particularly those that have subscription agreements for more than $100,000 in annual recurring revenue (“ARR”), are indicators of our market penetration, particularly within enterprise accounts, the growth of our business, and our potential future business opportunities. We define ARR as the annualized recurring value of all active contracts at the end of a reporting period. We define a customer as a separate legal entity, such as a company or an educational or government institution, that has an active subscription with us or one of our partners to access our platform. In situations where an organization has multiple subsidiaries or divisions, we treat the parent entity as the customer instead of treating each subsidiary or division as a separate customer. Increasing awareness of our platform and its broad range of capabilities, coupled with the fact that the world is always on and powered by increasingly complex technology, has expanded the diversity of our customer base to include organizations of all sizes across virtually all industries. Over time, enterprise and mid-market customers have constituted a greater share of our revenue.
As of April 30,
20222021
Customers15,040 13,918 
Customers greater than $100,000 in ARR655 458