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What changed in PagerDuty, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of PagerDuty, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+478 added−481 removedSource: 10-K (2025-03-17) vs 10-K (2024-03-15)

Top changes in PagerDuty, Inc.'s 2025 10-K

478 paragraphs added · 481 removed · 373 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

75 edited+21 added−21 removed20 unchanged
Biggest changeRegulatory We are subject to a number of U.S. federal and state and foreign laws and regulations that involve matters central to our business. These laws and regulations may involve data privacy, security, intellectual property, competition, consumer protection, export, taxation, or other subjects.
Biggest changeThese laws and regulations may involve data privacy, security, intellectual property, competition, consumer protection, export, taxation, or other subjects. Many of the laws and regulations to which we are subject are still evolving, subject to change, and being tested in courts, and could be interpreted in ways that could harm our business.
The PagerDuty Operations Cloud consists of the following products that empower teams to address broader digital operations management requirements. • PagerDuty Incident Management. PagerDuty Incident Management provides a real-time view across the status of a digital service while incorporating intelligent noise reduction to remove false positives.
The PagerDuty Operations Cloud consists of the following products that empower teams to address broader digital operations management requirements. • Incident Management. PagerDuty Incident Management provides a real-time view across the status of a digital service while incorporating intelligent noise reduction to remove false positives.
We have invested extensively in an ecosystem that includes over 700 integrations, allowing us to harness data from software-enabled systems and devices. We have deep integrations to a range of widely used technologies, such as Amazon Web Services (“AWS”), Datadog, HashiCorp, New Relic, and Splunk, and many bidirectional integrations such as Atlassian, Microsoft VSTS, Salesforce, ServiceNow, and Slack.
We have invested extensively in an ecosystem that includes over 700 integrations, allowing us to harness data from software-enabled systems and devices. We have deep integrations to a range of widely used technologies, such as Amazon Web Services (“AWS”), HashiCorp, New Relic, and Splunk, and many bidirectional integrations such as Atlassian, Microsoft VSTS, Salesforce, ServiceNow, and Slack.
Customer Success We are committed to the success of our customers. This means delivering performance improvements that enable our customers to mature their digital initiatives. The key to delivering recurring value is rapid implementation of our PagerDuty capabilities with a focus on continuous improvement throughout our relationship.
Customer Success We are committed to the success of our customers. This means delivering recurring value via performance improvements that enable our customers to mature their digital initiatives. The key to delivering recurring value is rapid implementation of our PagerDuty capabilities with a focus on continuous improvement throughout our relationship.
Our Environmental, Social and Governance strategy and priorities are managed by our Environmental, Social and Governance Steering Committee, and are implemented by our Environmental, Social and Governance Working Group, composed of cross-functional business leaders, to help ensure that our business produces positive impact.
Our sustainability strategy and priorities are managed by our Environmental, Social and Governance Steering Committee, and are implemented by our Environmental, Social and Governance Working Group, composed of cross-functional business leaders, to help ensure that our business produces positive impact.
Customers ingest and normalize events from any source, and extract signal from the noise with intelligent alert grouping, enrichment and triage support, change intelligence, and dynamic routing leading to fewer incidents and faster resolution. • Process Automation. PagerDuty Process Automation provides a centralized design time and run time environment for orchestrating automated workflows that span across departments, technologies, and networks.
Customers ingest and normalize events from essentially any source, and extract signal from the noise with intelligent alert grouping, enrichment and triage support, change intelligence, and dynamic routing leading to fewer incidents and faster resolution. • Automation. PagerDuty Automation provides a centralized design-time and run-time environment for orchestrating automated workflows that span across departments, technologies, and networks.
To calculate our total addressable market, we multiply our estimate of 80 million potential users by our applicable product average revenue per user. We believe that we have approximately 1% penetration worldwide within these markets. In addition to our core use cases, we are seeing customers use our platform across their business operations and industrial operations.
To calculate our total addressable market, we multiply our estimate of 87 million potential users by our applicable product average revenue per user. We believe that we have approximately 1% penetration worldwide within these markets. In addition to our core use cases, we are seeing customers use our platform across their business operations and industrial operations.
We combine process automation technology with team mobilization to serve up a proposed automation routine to the right responder, with the option to initiate it with the click of a button. This enables tier one responders with easy press-button automation of powerful remediation steps to cut critical minutes out of outages and incidents. • Secure, resilient, and scalable.
We combine process automation technology with team mobilization to serve up proposed automation routines to the right responder, with the option to initiate it with the click of a button. This enables tier one responders with the easy press-button automation of powerful remediation steps to cut critical minutes out of outages and incidents. • Secure, resilient, and scalable.
We assist our customers by enhancing their ability to operate in real-time via cross-functional workflows in engineering, IT, security, customer support, executive leadership, and across their entire employee base.
We assist our customers by enhancing their ability to operate in real-time via cross-functional data telemetry, workflows in engineering, IT, security, customer support, executive leadership, and across their entire employee base.
Further, we continue to empower PagerDuty Employee Resource Groups and global impact champions to deploy funds to organizations and issues aligned to their community through our employee-led community grantmaking program. Our Employee Impact programs are designed to engage employees in these sorts of initiatives throughout their tenure, beginning with new hire onboarding.
Further, we continue to empower PagerDuty Employee Resource Groups and global impact champions to deploy funds to organizations and issues aligned to their community through our employee-led community grantmaking program. 11 Table of Contents Our employee impact programs are designed to engage employees in these sorts of initiatives throughout their tenure, beginning with new hire onboarding.
We also host and present at regional, national, and global events to engage both customers and prospects, deliver product training, share best practices, and foster community. Our technical leaders and evangelists frequently speak as subject matter experts at market-leading developer events like DevOps Days.
We also host and present at regional, national, and global events to engage both customers and prospects, deliver product training, share best practices, and foster community. Our technical leaders and evangelists frequently speak as subject matter experts at market-leading developer events.
We have spent more than a decade building deep product integrations to our platform, and our ecosystem now includes over 700 direct integrations to enable our customers to gather and correlate digital signals from any system or device. This allows technical teams to collect digital signals from any system or platform in their environment without the effects of context switching.
We have spent more than a decade building deep product integrations to our platform, and our ecosystem now includes over 700 direct integrations to enable our customers to gather and correlate digital signals from their technology stack. This allows technical teams to collect digital signals from nearly any system or platform in their environment without the effects of context switching.
The renewals team works proactively to reduce customer churn and downgrade and provide customers with a positive on-time renewal experience. Research and Development Our research and development team consists of our user experience, product management, engineering and technical operations teams.
The renewals team works proactively to reduce customer churn and downgrade and provide customers with a positive on-time renewal experience. 7 Table of Contents Research and Development Our research and development team consists of our engineering, product management, user experience, and technical operations teams.
Global Impact and Environmental, Social and Governance Initiatives We launched PagerDuty.org in 2018 to help make a sustainable contribution to the communities in which we live, work, and serve by adding value to the planet and society, and therefore, to the company. PagerDuty.org empowers mission-driven teams to build a more equitable world and sustainable future.
Global Impact and Sustainability Initiatives We launched PagerDuty.org in 2018 to help make a sustainable contribution to the communities in which we live, work, and serve by adding value to the planet and society, and therefore, to the company. PagerDuty.org empowers mission-driven teams to build a more equitable world and sustainable future.
Our integrations support a broad range of use cases including developers, IT, security, customer service and support, and other business functions. We provide capabilities through which our users can easily build integrations themselves and connect our products with other third-party technologies. • Breadth of functionality.
Our integrations support a broad range of use cases across development, IT, security, customer service and support, and other business functions. We provide capabilities through which our users can easily build integrations themselves and connect our products with other third-party technologies. • Breadth of functionality.
We do so by helping social impact organizations automate critical work and increase team productivity while reducing costs through our technology platform; deploying funding to advance equitable health and climate outcomes; and activating employees to create meaningful impact.
We do so by helping social impact organizations automate critical work and increase team productivity while reducing costs through our technology platform; deploying funding to advance equitable health and climate outcomes; and activating employees to create meaningful impact; and responsibly and ethically using our resources.
Our direct sales efforts are focused on enterprise and large customers with solution and value led engagement for executives and technology buyers. At small and midsize companies, development and IT professionals often make an initial purchase of our platform for a small number of users and then expand users and add products over time.
Our direct sales efforts are focused on enterprise and large customers, positioning our solutions through business value-led engagement with executives and technology buyers. At small and midsize companies, development and IT professionals often make an initial purchase of our platform for a small number of users and then expand users and add products over time.
We will continue to target our potential customers with community building and marketing programs that include digital campaigns, our user events, executive programming, broader industry events, customer marketing activities, partner marketing, and user meet-ups. • Expand usage within our existing customer base across development, IT infrastructure and operations, security operations, customer service and support, as well as with new user groups such as business and industrial operations.
We will continue to target potential customers with community building and marketing programs, which include digital campaigns, user events, executive programming, broader industry events, customer marketing activities, and partner and ecosystem engagement. • Expand usage within our existing customer base across development, IT infrastructure and operations, security operations, customer service, and support, as well as with new user groups such as business and industrial operations.
We are agnostic to our customer’s technology stack and provide them the choice to use the technologies that meet their needs. We are flexible, modular, and open in our approach to building our platform with a powerful API to enable rapid integrations into even the most complex environments.
We are agnostic to our customer’s technology stack and provide them the choice to use the technologies that meet their needs. We are flexible, modular, and open in our approach to building our platform with a powerful application programming interface (“API”) to enable rapid integrations into even the most complex environments.
The self-service, low friction nature of our offering allows us to expand our reach into other regions where we see significant opportunity. Our international operations generated 28% of our revenue in the fiscal year ended January 31, 2024. • Grow our U.S. Public Sector and Federal presence.
The self-service, low friction nature of our offering allows us to expand our reach, through direct sales and partners, into other regions where we see significant opportunity. Our international operations generated 28% of our revenue in the fiscal year ended January 31, 2025. • Grow our U.S. public sector and Federal presence.
We have delivered 99.98% availability to our customers over the past 24 months. Security is a critical customer requirement, and we have governance, robust access control policies and vulnerability management to support the needs of our customers. • Designed for the user. Our software is instant on and easy to adopt and use.
We have delivered 99.99% availability to our customers over the past 24 months. Security is a critical customer requirement, and we have governance, robust access control policies, and vulnerability management to support the needs of our customers. • Designed for users and teams. Our software is easy to adopt and use.
We collect data and digital signals from virtually any software-enabled system or device and leverage powerful machine learning (ML) to correlate, process, and predict opportunities and incidents.
Today, we collect data and digital signals from virtually any software-enabled system or device and leverage AI and machine learning to correlate, process, and predict opportunities and incidents.
PagerDuty empowers the full ROI of our customers’ technology stack, using machine learning, automation, auto-remediation, and self-healing to bring together the right people with the right information to generate the appropriate action, in real time, when seconds matter.
PagerDuty empowers the full return on investment (“ROI”) of our customers’ technology stack, using machine learning, AI, automation, auto-remediation, and self-healing to bring together the right people with the right information to generate the appropriate action, in real time, when seconds matter.
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. PagerDuty has a land-and-expand business model that leads to viral adoption of our products and subsequent expansion.
Those same integrations connect with popular collaboration tools and business applications within modern and legacy technology stacks to drive automation of work. We generate revenue primarily from cloud-hosted software subscription fees. We also generate revenue from term-license software subscription fees. PagerDuty has a land-and-expand business model that leads to viral adoption and expansion of our products.
In addition to internal development, we can expand our product portfolio and offerings through acquisitions. • Grow our international presence. We intend to build on our success to date and grow our sales outside North America, particularly in EMEA, Asia Pacific, and Japan.
In addition to internal development, we can expand our product portfolio and offerings through partnerships and acquisitions. • Grow our international presence. We will build on our success by growing our sales outside North America, particularly in EMEA, Asia Pacific, and Japan.
Our Impact Pricing offering includes five free Professional user licenses, 40% off additional products, and expanded onboarding and training resources. Through our technical pro bono program, employees provide technical expertise to help Impact Customers implement or optimize their use of PagerDuty. As of January 31, 2024, we serve 479 Impact Customers representing $3.1 million ARR.
Our impact pricing offering includes five free Professional user licenses, up to 40% off additional products, and expanded onboarding and training resources. Through our technical pro bono program, employees provide technical expertise to help impact customers implement or optimize their use of PagerDuty. As of January 31, 2025, we serve 585 Impact Customers representing $4.9 million ARR.
The Nominating and Corporate Governance Committee of our board of directors has oversight over environmental, social and governance initiatives, per its charter. We completed two materiality assessments in 2021 and 2023 to guide our impact priorities and a comprehensive inventory covering all three scopes of greenhouse gas emissions to assess our carbon footprint.
The Nominating and Corporate Governance Committee of our board of directors has oversight over environmental, social and governance initiatives, per its charter. We periodically conduct materiality assessments to guide our impact priorities, and perform a comprehensive inventory covering all three scopes of greenhouse gas emissions to assess our carbon footprint.
Item 1. Business Overview PagerDuty, Inc. is a global leader in digital operations management, enabling customers to achieve operational efficiency at scale and transform critical work for modern enterprises.
Item 1. Business Overview PagerDuty, Inc. (“PagerDuty,” “we,” “us” or “our”) is a global leader in digital operations management, enabling customers to achieve operational efficiency at scale and transform critical work for modern enterprises.
We had 20 issued patents and 28 patent applications pending examination in the United States as of January 31, 2024 that, with respect to issued patents, are expected to have terms ending between 2033 and 2042. We pursue the registration of domain names, trademarks, and service marks in the United States and in various jurisdictions outside the United States.
We had 25 issued patents and 45 patent applications pending examination in the United States as of January 31, 2025 that, with respect to issued patents, are expected to have terms ending between 2033 and 2043. We pursue the registration of domain names, trademarks, and service marks in the United States and in various jurisdictions outside the United States.
With real-time data, two-way communication, and a fully integrated tool stack, we provide what our customers need to act as a unit and resolve issues faster. During an incident, customers receive proactive and clear information on service status, resolution activities, and even the ability to escalate, right from within today’s most populated case management platforms.
With time-critical operations data, two-way communication, and a fully integrated tool stack, we provide what our customers need to act as a unit and resolve issues faster. During an incident, customers receive proactive and clear information on service status, resolution activities, and the ability to escalate, directly from within today’s most popular case management platforms. • Artificial Intelligence.
We continue to invest in our business and had a net loss attributable to PagerDuty of $75.2 million and $128.4 million for the fiscal years ended January 31, 2024 and 2023, respectively. Our Platform and Key Customer Benefits We have invested aggressively in research and development to build innovative products that deliver value to our customers.
We continue to invest in our business and had a net loss attributable to PagerDuty of $42.7 million and $75.2 million for the fiscal years ended January 31, 2025 and 2024, respectively. 4 Table of Contents Our Platform and Key Customer Benefits We have invested aggressively in research and development to build innovative products that leverage AI and automation to deliver value to our customers.
Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; adverse publicity and reputational damage; loss of revenue or profits; loss of customers or sales; decrease the price of our common stock; and other adverse business consequences.” Geographic Information For a description of our revenue and long-lived assets by geographic location, see Note 15, “Geographic Information” of the Notes to our Consolidated Financial Statements included elsewhere in this Form 10-K.
Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; adverse publicity and reputational damage; loss of revenue or profits; loss of customers or sales; decrease the price of our common stock; and other adverse business consequences.” Geographic Information For a description of our revenue and long-lived assets by geographic location, see Note 15.
That requires managing the entire service lifecycle from collecting data, interpreting digital signals, mobilizing a response when needed, and providing insights—all in real time.
This requires the ability to manage the entire service lifecycle from collecting data, interpreting digital signals, mobilizing a response when needed, and providing insights - all in real time.
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 infrastructure and operations, security, customer service, and executive stakeholder roles across an organization.
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 the silos of development, information technology (“IT”) infrastructure and operations, security, customer service, and business operations and reaches executive stakeholder roles across an organization.
Ninety-six percent of our employees participated in volunteering or giving in 2023, with 86% citing that “PagerDuty’s investment in social impact makes me proud to work here.” In 2021, PagerDuty expanded its tailored support to mission-driven organizations, enabling nonprofit organizations, B Corps, and higher education institutions globally to more easily access critical technology that 13 Table of Contents saves them time and money, so they can focus their efforts on their most essential work.
Beginning with new hires, our rewards and recognition programs celebrate the contributions employees make in giving their time, expertise, or capital. 83% of our employees participated in volunteering or giving in 2024, with 83% citing that “PagerDuty’s investment in social impact makes me proud to work here.” In 2021, PagerDuty expanded its tailored support to mission-driven organizations, enabling nonprofit organizations, B Corps, and higher education institutions globally to more easily access critical technology that saves them time and money, so they can focus their efforts on their most essential work.
We are continually investing in our global workforce to further drive diversity and inclusion, provide fair and market-competitive total rewards to engage our employees, support our employees’ well-being, and foster their growth and development. As of January 31, 2024, we had 1,182 employees, of which approximately 59% were in the United States and 41% were in our international locations.
We are continually investing in our global workforce to create a sense of belonging, provide fair and market-competitive total rewards to engage our employees, support our employees’ well-being, and foster their growth and development. As of January 31, 2025, we had 1,242 employees, of which approximately 55% were in the United States and 45% were in our international locations.
The PagerDuty.org Fund amplifies partner impact through unrestricted funding, donated product, and technical employee pro bono expertise in our core areas of Time-Critical Health and Climate. We deployed approximately $1.3 million in the fiscal year ended January 31, 2024, to advance the work of tech-forward organizations in our areas of focus.
The PagerDuty.org Fund amplifies partner impact through unrestricted funding, donated product, and technical employee pro bono expertise. We deployed approximately $1.3 million in the fiscal year ended January 31, 2025, to advance the work of tech-forward organizations in crisis-response, crisis lines, and food equity.
We will continue to make investments in research and development to bolster our existing products, increase the reach of our integrations, and innovate on our platform. Our expanding portfolio of products provides us additional opportunities to upsell and cross-sell into our customer base.
We will continue to make investments in research and development to bolster our existing solutions and products, increase the reach of our integrations, and innovate on our platform. Our expanding portfolio of solutions provides us additional opportunities to create business value for customers that results in upsell and cross-sell expansion growth.
Although we rely on intellectual property rights, including trade secrets, patents, copyrights, and trademarks, as well as contractual protections to establish and protect our proprietary rights, we believe that factors such as the technological and creative skills of our personnel, creation of new modules, features and functionality, and frequent enhancements to our platform are more essential to establishing and maintaining our technology leadership position.
Although we rely on intellectual property rights, including trade secrets, patents, copyrights, and trademarks, as well as contractual protections to establish and protect our proprietary rights, we believe that factors such as the technological and creative skills of our personnel, creation of new modules, features and functionality, and frequent enhancements to our platform are more essential to establishing and maintaining our technology leadership position. 9 Table of Contents Regulatory We are subject to a number of U.S. federal and state and foreign laws, regulations, federal acquisition regulations, and other legal requirements that involve matters central to our business.
We estimated that in 2023, there were approximately 80 million potential users worldwide in the development, IT infrastructure and operations, customer service and support, and security operations segments, comprised of approximately: • 29.0 million development personnel • 22.0 million IT operations personnel • 27.0 million customer service and support personnel • 2.0 million security operations personnel We estimate our total addressable market is over $38 billion.
We estimated that in 2024, there were approximately 87 million potential users worldwide in the development, IT infrastructure and operations, customer service and support, and security operations segments, comprised of approximately: • 30.0 million development personnel • 23.0 million IT operations personnel • 28.0 million customer service and support personnel • 6.0 million security operations personnel We estimate our total addressable market is approximately $50 billion.
Our volunteer time off policy offers employees 20 hours annually to volunteer and vote. In 2023, we launched a gift matching program to amplify employee donations to eligible nonprofit organizations, providing a capped 1:1 match for employee contributions. Beginning with new hires, our rewards and recognition programs celebrate the contributions employees make in giving their time, expertise, or capital.
Our volunteer time off policy offers employees 20 hours annually to volunteer and vote. In 2023, we launched a gift-matching program to amplify employee donations to eligible nonprofit organizations, providing a capped 1:1 match for employee contributions.
Our Growth Strategies • Land new customers . We will continue to target new customers by leveraging our trusted brand and efficient go-to-market strategy that combines self-serve viral adoption for all customers with a focused direct sales effort for potential large and enterprise customers and by leveraging channel sales.
We will continue to target new customers by leveraging our trusted brand and efficient go-to-market strategy, which combines self-serve viral adoption for all customers with a focused direct sales effort for potential enterprise customers. We will leverage partner growth pathways and continue to build our partner ecosystem to drive value, awareness, sales, and adoption of our products.
Our global sales teams focus on both new customer acquisition and up-selling and cross-selling additional products to our existing customers. Our sales teams are organized by geography, consisting of the Americas, EMEA, Asia Pacific, and Japan, as well as by target company size and industry vertical.
Our global sales teams focus on both new customer acquisition and up-selling and cross-selling additional products to our existing customers. Our sales teams are primarily organized by geography, consisting of the Americas, EMEA, Asia Pacific, and Japan. In the Americas, we have a sales team specifically focused on the public sector.
Because global laws and regulations have continued to develop and evolve rapidly, it is possible that we may not be, or may not have been, compliant with each such applicable law or regulation.
In addition, the application and interpretation of these laws and regulations often are uncertain, particularly in the new and rapidly evolving industry in which we operate. Because global laws and regulations have continued to develop and evolve rapidly, it is possible that we may not be, or may not have been, compliant with each such applicable law or regulation.
Employee Engagement and Development 12 Table of Contents We are deeply committed and invested in ensuring our employees are provided with the resources and tools to not only thrive at PagerDuty, but to work better together as a distributed global company.
We also provide emotional well-being services through our employee assistance program and a variety of other behavioral health support applications. Employee Engagement and Development We are deeply committed and invested in ensuring our employees are provided with the resources and tools to not only thrive at PagerDuty, but to work better together as a global company.
These groups are responsible for the design, development, testing, delivery and support 9 Table of Contents of new and existing technologies and features for our platform. They are also responsible for scaling our platform and improving our cloud infrastructure and ultimately, our high availability.
These groups are responsible for the design, development, testing, delivery, and support of new and existing technologies and features for our platform. They are also responsible for scaling our platform and improving our cloud infrastructure and ultimately, our high availability. We invest substantial resources in research and development to drive core technology innovation and bring new products to market.
For enterprise customers, our field sales teams orient around engagement with senior IT and business operations management and align our marketing strategies to the business problems we solve for these leaders.
We principally deploy a high-touch sales-led motion for enterprise customers in our key verticals and largely a programmatic and product-led motion for smaller and mid-market customers. For enterprise customers, our field sales teams orient around engagement with senior IT, engineering, and business operations management and our marketing strategies align to the business problems we solve for these leaders.
None of our employees are represented by a labor union with respect to his or her employment. We have not experienced any work stoppages and we consider our relations with our employees to be good.
None of our employees are represented by a labor union with respect to his or her employment. We have not experienced any work stoppages and we consider our relations with our employees to be good. Global Belonging Our vision is to build an equitable world where we transform critical work so all teams can delight their customers and build trust.
Using incident management, process automation, AI operations and customer service operations, 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.
Using incident management, automation, AI operations, and customer service operations, our platform for digital operations 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. In addition, our generative AI capabilities allow organizations to manage mission-critical tasks smarter and faster.
We will continue to advance our sales and customer success efforts and how we work with partners to demonstrate to customers how increased adoption of teams and users on the platform and new adoption of products and solutions with the platform can drive value through revenue growth and reduced risk and cost. 8 Table of Contents • Introduce new products and solutions.
We continue to advance our sales, service and customer success efforts and how we work with partners to demonstrate business value to our customers that drives increased adoption by teams and users of our solutions. 6 Table of Contents • Introduce new products and solutions.
There is no concept of queued tickets 6 Table of Contents or queued work on our platform because we are built to understand these situations and solve incidents within seconds or minutes, not hours or days. • Nearly 15 years of data from over 15,000 paying customers.
There is no concept of queued tickets or queued work on our platform because we are built to understand these situations and solve incidents within seconds or minutes. • Over a decade of data from over 15,000 paying customers. As pioneers in digital operations management, we have a rich repository of machine-generated and human response data.
The PagerDuty Operations Cloud combines AIOps, Automation, Incident Management, and Customer Service Operations into a flexible, resilient and scalable platform to increase innovation velocity, protect revenue, reduce cost, and mitigate the risk of operational failure. Today, nearly every business is a digital business.
The PagerDuty Operations Cloud combines artificial intelligence (“AI”) operations (“AIOps”), automation, customer service operations, and incident management with a generative AI assistant to create a flexible, resilient, and scalable platform to protect revenue and improve customer experience, accelerate innovation, improve operational efficiency, and mitigate risk of operational failures. Today, nearly every business is a digital business.
As a result, we face competition from vendors who provide similar capabilities in some of our product areas across the digital operations management industry including Atlassian, Splunk, Red Hat, Everbridge, ServiceNow and others. We also face competition from home grown/in-house solutions.
As a result, we face competition from vendors who provide similar capabilities in some of our product areas, including Atlassian, Splunk, Red Hat, Everbridge, ServiceNow, and others. We also face competition from homegrown/in-house solutions. As we continue to expand our offerings in emerging areas, including automation and AI, we expect competition from other vendors focused on these areas.
Our cloud-first platform is differentiated based on a broad range of attributes: • Built for real time. Our platform manages today’s complex and contemporary digital services. These are hybrid cloud and microservice based environments that are constantly changing state.
Our cloud-first platform is differentiated based on a broad range of attributes: • Built for time-sensitive, mission-critical operations. Our platform is purpose-built to manage the real-time needs of modern digital operations. Our customers are navigating complex hybrid-cloud and microservices-based environments that are constantly changing state.
We strive to provide a holistic experience where our employees feel engaged and connected to our company’s goals, as well as seeing themselves growing and developing within our organization.
Our team equips our leaders with the coaching and training necessary to have conversations with our employees to empower them to own and drive their career development goals. We strive to provide a holistic experience where our employees feel engaged and connected to our company’s goals, as well as seeing themselves growing and developing within our organization.
We invest substantial resources in research and development to drive core technology innovation and bring new products to market. Our distributed research and development efforts enable us to attract the best talent across our multiple locations, including San Francisco, Atlanta, Toronto, and Lisbon as well as fully remote workers not located near our hubs.
Our distributed research and development efforts enable us to attract the best talent across our multiple locations, including San Francisco, Atlanta, Toronto, and Lisbon as well as fully remote workers not located near our hubs. Sales and Marketing We employ a go-to-market strategy organized around the size of a company and industry vertical.
Our focus is to increase employee engagement throughout the entire employee lifecycle through intentional listening, activating our company values and practice, and communicating our employee value proposition to employees, customers and partners.
Our focus is to increase employee engagement throughout the entire employee lifecycle through intentional listening, activating our company values and practice, and communicating our employee value proposition to employees, customers and partners. Through different methods of listening, such as our periodic engagement surveys, we gather specific feedback on drivers of engagement to better create an engaging experience for all Dutonians.
We leverage viral adoption through word of mouth, user-centric content marketing, and grass roots brand development with a high-velocity programmatic and product led sales motion for both the initial land of new customers and the subsequent expansion of smaller and mid-market customers.
We drive demand and brand differentiation through a mix of digital, account-based, and event-driven initiatives targeted at enterprise decision-makers. Additionally, customer awareness and adoption is driven through word of mouth, brand development with a high-velocity programmatic and product-led sales motion for both the initial land of new customers and the subsequent expansion of smaller and mid-market customers.
Our open technology and broad range of integrations ensures that we can effectively co-exist with our customers' technology. 7 Table of Contents • Enhanced productivity.
Our open technology and broad range of integrations ensures that we can effectively co-exist with our customers' technology, including our chat experience, which includes Slack and Teams to allow users to work in their preferred tools and working environments. 5 Table of Contents • Enhanced productivity.
Through our Impact Accelerator program, we have onboarded five new organizations to the PagerDuty platform to date: AccesSOS, Nexleaf Analytics, SIRUM, Trek Medics International, and Youth ALIVE!. These organizations are reimagining emergency care rooted in equity, tackling public health challenges using sensor technologies and data analytics, and healing communities by breaking the cycle of violence.
Through our Impact Accelerator program, we continue to support organizations advancing crisis response and mental health services, including Crisis Text Line, EmpowerWork, NAMI, TrekMedics, Turn.io, and YouthAlive!. These organizations are reimagining emergency care rooted in equity, tackling public health challenges using sensor technologies and data analytics, and healing communities by breaking the cycle of violence.
Human Capital 11 Table of Contents Our corporate culture is a critical component of our success and we will continue taking steps to help foster innovation, teamwork, diversity, and inclusion.
Geographic Information in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Human Capital Our corporate culture is a critical component of our success, and we will continue taking steps to help foster innovation, teamwork, and inclusion.
Larger competitors, in particular, possess the operational flexibility to bundle competing products and services within broader software offerings, often presenting them at a reduced price. Intellectual Property We rely on a combination of trade secrets, patents, copyrights, and trademarks, as well as contractual and other protections, to establish and protect our intellectual property rights.
Intellectual Property We rely on a combination of trade secrets, patents, copyrights, and trademarks, as well as contractual and other protections, to establish and protect our intellectual property rights.
An increasing focus for our go-to-market motion, including our field sales team, is serving enterprise customers. These teams drive expansion to additional users, new use cases, and additional products, as well as upgrades to higher-value plans. Our mid-market and enterprise customers account for the majority of our revenue today.
The PagerDuty sales and customer success teams drive expansion to additional users, new use cases, and additional products, as well as upgrades to higher-value plans. Our enterprise customers account for the majority of our revenue today. The PagerDuty platform is central to customer initiatives targeted at incident management transformation, operations center modernization, automation standardization, and customer experience operations.
We regularly evaluate our total rewards programs to ensure we are providing an employee value proposition that is competitive with a constantly changing market, as well as meets a hierarchy of needs of our employees. Aligned with our company strategy and objectives, our compensation programs include fixed base salary and opportunities for short-term and long-term variable incentives for those eligible.
Our employee pay programs and practices are designed to drive innovation, align pay to level of performance, and reflect PagerDuty’s cultural values and goals. We regularly evaluate our total rewards programs to ensure we are providing an employee value proposition that is competitive with a constantly changing market, as well as meets a hierarchy of needs of our employees.
Customers may begin their journey on the PagerDuty platform with the Free plan for up to 5 users and grow into full Digital Operations capabilities with thousands of users.
Customers may begin their journey on the PagerDuty platform with the Free plan for up to five users and grow into full Enterprise capabilities with thousands of users. PagerDuty AIOps empowers customers to optimize costs associated with unplanned operations. Leveraging unsupervised machine learning, integrated automation, and event management, the solution detects and mitigates incidents in real time.
We offer a wide variety of benefits including, but not limited to, medical, dental, and vision benefits, flexible spending and health savings accounts, generous paid time-off and leave programs, and retirement plans. We also provide emotional well-being services through our Employee Assistance Program and a variety of other behavioral health support applications.
Aligned with our company strategy and objectives, our compensation programs include fixed base salary and opportunities for short-term and long-term variable incentives for those eligible. We offer a wide variety of benefits including, but not limited to, medical, dental, and vision benefits, flexible spending and health savings accounts, generous paid time-off and leave programs, and retirement plans.
Our Incident Management product empowers customers to mobilize the right response when seconds matter, and is offered as four plan options offered on a per user basis - Free, Professional, Business and Digital Operations - to address increasingly complex requirements.
In addition, we factor in target company size and industry vertical in creating our sales teams. PagerDuty Incident Management is offered as four plan options offered on a per-user basis - Free, Professional, Business and Enterprise - to address increasingly complex requirements.
The PagerDuty Field organization is focused on selling the PagerDuty platform across IT, development, and customer service operations teams. Our business has experienced rapid growth since our inception. For the fiscal years ended January 31, 2024 and 2023, our revenue was $430.7 million and $370.8 million, respectively.
Our platform provides the technology to solve the customer problems underlying these and many other business initiatives. Our business has experienced rapid growth since our inception. For the fiscal years ended January 31, 2025 and 2024, our revenue was $467.5 million and $430.7 million, respectively.
As we continue to expand our offerings in emerging areas, including Customer Service and AI, we expect increased competition from other vendors focused on these areas. 10 Table of Contents Key competitive factors include total cost of ownership, product functionality, breadth of offerings, security, flexibility, and performance. PagerDuty is confident in our favorable positioning against competitors across these factors.
Key competitive factors include total cost of ownership, product functionality, breadth of offerings, security, flexibility, and performance. PagerDuty is confident in our favorable positioning against competitors across these factors. The potential introduction of new technologies by existing competitors could impact demand for our services.
Our Customer Service Operations product bridges the gap between customer service and technical teams, and is offered as three plan options on a per user basis - Professional, Business and Digital Operations - to address increasingly complex requirements.
AIOps is offered under a consumption model supporting tiers of consumption events. PagerDuty for Customer Service Operations connects and bridges the gap between customer cases from customer service teams and incidents for IT operations and Development teams. It is offered in three plan options similar to our Incident Management plans on a per-user basis - Professional, Business, and Enterprise.
In August 2023 we announced our approval for “In Process” status within the Federal Risk and Authorization Management Program (FedRAMP®) and are listed as “In Process” in the FedRAMP Marketplace. Our Market Opportunity Our platform has demonstrated core use cases across development, IT infrastructure and operations, customer service and support, and security operations.
Our Market Opportunity Our platform has demonstrated core use cases across development, IT infrastructure and operations, customer service and support, security operations and other business functions.
The potential introduction of new technologies by existing competitors could impact demand for our services. Additionally, we face pricing pressures as competitors offer dramatically lower prices to get their foot into accounts before they increase prices in the future.
Additionally, we face pricing pressures as some competitors offer dramatically lower prices to get their foot into accounts before they increase prices in the future. Larger competitors, in particular, possess the operational flexibility to bundle competing products and services within broader software offerings, often presenting them at a reduced price.
We have embedded machine learning, automation, AI, insights, and best practices across our products to help our customers realize value quickly. • Proactive. We are leading a shift from efficient response to proactive and predictive action to help teams prevent incidents from occurring. • Combine process automation and team mobilization.
We are leading a shift from efficient response to intelligent automation to help teams prevent incidents from occurring. We continue to invest in design and innovation capabilities to create proactive and predictive operations with our AI-enabled solutions, including AIOps, event orchestration, automation, and PagerDuty Advance. • Combine intelligent automation and team mobilization.
Compensation, Benefits, and Well Being We offer equitable, competitive compensation and benefits that support our employees’ overall well-being and attract, motivate, and retain qualified, diverse talent, equitably rewarding employees for their performance contributions and impact. Our employee pay programs and practices are designed to drive innovation, align pay to level of performance, and reflect PagerDuty cultural values and goals.
These volunteer-driven opportunities inspire engagement and collaboration that drive our company’s objectives and success. 10 Table of Contents Compensation, Benefits, and Well-Being We offer competitive compensation and benefits that support our employees’ overall well-being and attract, motivate, and retain a talented workforce, rewarding employees for their performance contributions and impact.
Competition The PagerDuty offering is designed to meet customers’ demands and offer solutions that cover the full incident life-cycle from detect, respond, mobilize, remediate, analyze and learn. This is complemented with capabilities to deliver deep AIOps insights, and automate processes and workflows in and adjacent to incident management.
We deliver full operations lifecycle management (from detection to response orchestration, to remediation, learning, and prevention), which is complemented with capabilities to deliver deep AIOps insights, and automate processes and workflows in and adjacent to incident management.
Removed
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.
Added
From retail to financial services, from travel and entertainment to supply chain logistics, everyday commerce relies on an incredibly complex network of digital infrastructure, systems, software, and teams.
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We have evolved from an on-call tool into a platform for digital operations, which resides at the center of a company’s technology ecosystem.
Added
And while that complexity is only increasing, the need for those digital operations to be resilient is also rising, as organizations face pressure to meet escalating customer expectations, resolve incidents proactively, and deliver innovation without increasing costs.
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As pioneers in digital operations management, we have a rich repository of machine-generated data and human response data.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, “processing”) personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, sensitive third-party data, business plans, transactions, and financial information (collectively, “sensitive data”).
Biggest changeIf our information technology systems or those of third parties with whom we work or our data, are or were compromised, we could experience adverse consequences resulting from such compromise, including, but not limited to, significant costs, litigation and regulatory investigations and actions, harm to our reputation, loss of revenue or profits, loss of customers, and other adverse consequences In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, “processing”) of personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, sensitive third-party data, business plans, transactions, and financial information (collectively, “sensitive data”), including sensitive data of our customers and their respective employees.
While we have been issued patents in the United States and have additional patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications. In addition, any patents that are issued may not provide us with competitive advantages or may be successfully challenged by third parties.
While we have been issued patents in the United States and have additional patent applications pending, we may be unable to obtain patent protection for the technology covered in our pending patent applications. In addition, any patents that are issued may not provide us with competitive advantages or may be successfully challenged by third parties.
If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal proceeding, our business, results of operations, and financial condition could be materially harmed.
If any subpoenas or investigations are launched, governmental or other sanctions are imposed, or we do not prevail in any possible civil or criminal proceeding, our business, results of operations, and financial condition could be materially harmed.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA and UK’s standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
Data Privacy Framework and the UK extension thereto (which allows for transfers for relevant U.S.-based organizations who self-certify compliance and participate in the Framework), these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States.
Data Privacy Framework and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework), these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States.
If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions (such as Europe) at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring personal data necessary to operate our business.
If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions (such as Europe) at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business.
In particular, plaintiffs have become increasingly more active in bringing data privacy-related claims against companies, including class claims and mass arbitration demands. Some of these claims allow for the recovery of statutory damages on a per violation basis, and, if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations.
In particular, plaintiffs have become increasingly more active in bringing privacy-related claims against companies, including class claims and mass arbitration demands. Some of these claims allow for the recovery of statutory damages on a per violation basis, and, if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations.
Any failure or perceived failure by us in this regard could have a material adverse effect on our reputation with investors, governments, customers, employees other third parties and the communities and industries in which we operate and on our business, share price, financial condition, access to capital or results of operations, including the sustainability of our business over time.
Any failure or perceived failure by us in this regard could have a material adverse effect on our reputation with investors, governments, customers, employees, other third parties, and the communities and industries in which we operate, and on our business, share price, financial condition, and access to capital or results of operations, including the sustainability of our business over time.
Our Notes may become in the future convertible at the option of their holders under certain circumstances. If holders of our Notes elect to convert their Notes, we may settle our conversion obligation by delivering to them a significant number of shares of our common stock, which would cause dilution to our existing stockholders.
Our Notes may become convertible in the future at the option of their holders under certain circumstances. If holders of our Notes elect to convert their Notes, we may settle our conversion obligation by delivering to them a significant number of shares of our common stock, which would cause dilution to our existing stockholders.
Further, due to political uncertainty and military actions such as Russia’s invasion of Ukraine or the conflict in Israel and the surrounding areas, we and the third parties upon which we rely may be vulnerable to a heightened risk of security incidents, computer malware, social-engineering attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of sensitive data or other information technology assets, and other cyber-attacks, including attacks that could materially disrupt our systems and operations, supply chain, and ability to do business.
Further, due to political uncertainty and military actions such as Russia’s invasion of Ukraine or the conflict in Israel, Syria, and the surrounding areas, we and the third parties upon which we rely may be vulnerable to a heightened risk of security incidents, computer malware, social-engineering attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of sensitive data or other information technology assets, and other cyber-attacks, including attacks that could materially disrupt our systems and operations, supply chain, and ability to do business.
We expect that our international activities will continue to grow for the foreseeable future as we continue to pursue opportunities in existing and new international markets, which will require significant dedication of management attention and financial resources. 29 Table of Contents Our current and future international business and operations involve a variety of risks, including: • recession or economic downturn globally or in the jurisdictions in which we do business; • inflation, as well as changes in existing and expected rates of inflation, which may vary across the jurisdictions in which we do business; • changes in a specific country’s or region’s political or economic conditions; • health epidemics or pandemics, influenza and other highly communicable diseases or viruses; • continuing uncertainty regarding social, political, immigration, and tax and trade policies in the U.S. and abroad, including as a result of the United Kingdom's withdrawal from the European Union (“EU”); • the need to adapt and localize our products for specific countries; • greater difficulty collecting accounts receivable and longer payment cycles; • potential changes in trade relations, regulations, or laws; • unexpected changes in laws, regulatory requirements, or tax laws; • more stringent regulations relating to data privacy and security and the unauthorized use of, or access to, commercial and personal information, particularly in Europe; • differing and potentially more onerous labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • challenges inherent in efficiently managing, and the increased costs associated with, an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs that are specific to each jurisdiction; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we chose to do so in the future; • limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • laws and business practices favoring local competitors or general market preferences for local vendors; • limited or insufficient intellectual property protection or difficulties enforcing our intellectual property; • political instability, including military actions; • terrorist activities; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
We expect that our international activities will continue to grow for the foreseeable future as we continue to pursue opportunities in existing and new international markets, which will require significant dedication of management attention and financial resources. 28 Table of Contents Our current and future international business and operations involve a variety of risks, including: • recession or economic downturn globally or in the jurisdictions in which we do business; • inflation, as well as changes in existing and expected rates of inflation, which may vary across the jurisdictions in which we do business; • changes in a specific country’s or region’s political or economic conditions; • health epidemics or pandemics, influenza and other highly communicable diseases or viruses; • continuing uncertainty regarding social, political, immigration, and tax and trade policies in the U.S. and abroad, including as a result of the United Kingdom's withdrawal from the European Union (“EU”); • the need to adapt and localize our products for specific countries; • greater difficulty collecting accounts receivable and longer payment cycles; • potential changes in trade relations, regulations, or laws; • unexpected changes in laws, regulatory requirements, or tax laws; • more stringent regulations relating to data privacy and security and the unauthorized use of, or access to, commercial and personal information, particularly in Europe; • differing and potentially more onerous labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • challenges inherent in efficiently managing, and the increased costs associated with, an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs that are specific to each jurisdiction; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we choose to do so in the future; • limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • laws and business practices favoring local competitors or general market preferences for local vendors; • limited or insufficient intellectual property protection or difficulties enforcing our intellectual property; • political instability, including military actions; • terrorist activities; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve the anticipated benefits from such acquisitions, due to a number of factors, including: • acquisition-related costs, liabilities, or tax impacts, some of which may be unanticipated; • difficulty integrating and retaining the personnel, intellectual property, technology infrastructure, and operations of an acquired business; • ineffective or inadequate, controls, procedures, or policies at an acquired business, including cybersecurity risks and vulnerabilities; • multiple product lines or services offerings, as a result of our acquisitions, that are offered, priced, and supported differently; • potential unknown liabilities or risks associated with an acquired business, including those arising from existing contractual obligations or litigation matters; • inability to maintain relationships with key customers, suppliers, and partners of an acquired business; • lack of experience in new markets, products or technologies; • diversion of management’s attention from other business concerns; and • use of resources that are needed in other parts of our business.
If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve the anticipated benefits from such acquisitions, due to a number of factors, including but not limited to: • acquisition-related costs, liabilities, or tax impacts, some of which may be unanticipated; • difficulty integrating and retaining the personnel, intellectual property, technology infrastructure, and operations of an acquired business; • ineffective or inadequate, controls, procedures, or policies at an acquired business, including cybersecurity risks and vulnerabilities; • multiple product lines or services offerings, as a result of our acquisitions, that are offered, priced, and supported differently; • potential unknown liabilities or risks associated with an acquired business, including those arising from existing contractual obligations or litigation matters; • inability to maintain relationships with key customers, suppliers, and partners of an acquired business; • lack of experience in new markets, products, or technologies; • diversion of management’s attention from other business concerns; and • use of resources that are needed in other parts of our business.
In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position. The reliability and continuous availability of our service is critical to our success.
In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position. The reliability and availability of our service is critical to our success.
Selling to such entities can also be highly competitive, expensive, and time-consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale. Government contracting requirements may change and in doing so restrict our ability to sell into the government sector until we have attained the revised certification.
Selling to such entities can be highly competitive, expensive, and time-consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale. Government contracting requirements may change and in doing so restrict our ability to sell into the government sector until we have attained the revised certification.
For example, the FTC has required other companies to turn over (or disgorge) valuable insights or trainings generated through the use of AI/ML where they allege the company has violated privacy and consumer protection laws. If we cannot use AI/ML or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage.
For example, the FTC has required other companies to turn over (or disgorge) valuable insights or trainings generated through the use of AI where they allege the company has violated privacy and consumer protection laws. If we cannot use AI or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, or our chief executive officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • establish that our board of directors is divided into three classes, with each class serving three-year staggered terms; • prohibit cumulative voting in the election of directors; 47 Table of Contents • provide that our directors may be removed for cause only upon the vote of sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock; • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and • require the approval of our board of directors or the holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock to amend our bylaws and certain provisions of our certificate of incorporation.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, or our chief executive officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • establish that our board of directors is divided into three classes, with each class serving three-year staggered terms; • prohibit cumulative voting in the election of directors; • provide that our directors may be removed for cause only upon the vote of sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock; • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and • require the approval of our board of directors or the holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock to amend our bylaws and certain provisions of our certificate of incorporation.
Some of our larger competitors, such as Atlassian and Splunk, have the operating flexibility to bundle competing solutions with other offerings, including offering them at a lower price or for no additional cost to customers as part of a larger sale of other products.
Some of our larger competitors, such as ServiceNow, Atlassian, and Splunk, have the operating flexibility to bundle competing solutions with other offerings, including offering them at a lower price or for no additional cost to customers as part of a larger sale of other products.
Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation state- supported actors.
Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation state- actors.
We are also bound by other contractual obligations related to data privacy and security, which have become increasingly stringent and complex due to changes in data privacy and security laws and regulations, and our efforts to comply with such obligations may not be successful.
We are also bound by contractual obligations related to data privacy and security, which have become increasingly stringent and complex due to changes in data privacy and security laws and regulations, and our efforts to comply with such obligations may not be successful.
Complying with these reporting and other regulatory requirements is time-consuming and will continue to result in increased costs to us and could have a negative effect on our business, financial condition and results of operations.
Complying with these reporting and other regulatory requirements is time-consuming and will continue to result in costs to us and could have a negative effect on our business, financial condition, and results of operations.
Additionally, certain privacy laws extend rights to consumers (such as the right to delete certain personal data) and regulate automated decision making, which may be incompatible with our use of AI/ML.
Additionally, certain privacy laws extend rights to consumers (such as the right to delete certain personal data) and regulate automated decision making, which may be incompatible with our use of AI.
In October 2023, we repurchased $230.0 million aggregate principal amount of the 2025 Notes in privately negotiated transactions with holders of the 2025 Notes and as of January 31, 2024, we had $57.5 million aggregate principal amount of the 2025 Notes outstanding.
In October 2023, we repurchased $230.0 million aggregate principal amount of the 2025 Notes in privately negotiated transactions with holders of the 2025 Notes and as of January 31, 2025, we had $57.5 million aggregate principal amount of the 2025 Notes outstanding.
Any interruptions or delays in our service or damage to our products, whether caused by modification or upgrades, third parties, terrorist attacks, state-sponsored attacks, geopolitical tensions or armed conflicts, export controls and sanctions, natural disasters, the effect of climate change 27 Table of Contents (such as drought, flooding, wildfires and resultant air quality effects and related preventative power shutdowns, increased storm severity, and sea level rise), power loss, utility outages, telecommunication failures, computer viruses, supply-chain attacks, computer denial of service attacks, phishing schemes, security breaches, or other attempts to harm or access our system, could harm our relationships with customers and cause our revenue to decrease or our expenses to increase.
Any interruptions or delays in our service or damage to our products, whether caused by modification or upgrades, third parties, terrorist attacks, state-sponsored attacks, geopolitical tensions or armed conflicts, export controls and sanctions, natural disasters, the effect of climate change (such as drought, flooding, wildfires and resultant air quality effects and related preventative power shutdowns, increased storm severity, and sea level rise), power loss, utility outages, telecommunication failures, computer viruses, supply-chain attacks, computer denial of service attacks, phishing schemes, security breaches, or other attempts to harm or access our system, could harm our relationships with customers and cause our revenue to decrease or our expenses to increase.
These obligations may make it harder for us to conduct our business using AI/ML, lead to regulatory fines or penalties, require us to change our business practices, retrain our AI/ML, or prevent or limit our use of AI/ML.
These obligations may make it harder for us to conduct our business using AI, lead to regulatory fines or penalties, require us to change our business practices, retrain our AI, or prevent or limit our use of AI.
We may not be able to successfully manage the growth of our business if we are unable to improve our internal systems, processes, and controls. We need to continue improving our internal systems, processes, and controls to effectively manage our operations and growth.
We may not be able to successfully manage the growth of our business if we are unable to continue improving our internal systems, processes, and controls. We need to continue improving our internal systems, processes, and controls to effectively manage our operations and growth.
Overall growth of our revenue depends on a number of factors, including our ability to: • price our digital operations platform effectively so that we are able to attract new customers and expand sales to our existing customers; • expand the functionality and use cases for the products we offer on our platform; • maintain or increase the rates at which customers purchase and renew subscriptions to our platform; • provide our customers with customer support that meets their needs; • continue to introduce our products to new markets; • successfully identify and acquire or invest in businesses, products, or technologies that we believe could complement or expand our platform; and 15 Table of Contents • increase awareness of our brand on a global basis and successfully compete with other companies.
Overall growth of our revenue depends on a number of factors, including our ability to: • price our digital operations platform effectively so that we are able to attract new customers and expand sales to our existing customers; • expand the functionality and use cases for the products we offer on our platform; • maintain or increase the rates at which customers purchase and renew subscriptions to our platform; • provide our customers with customer support that meets their needs; • continue to introduce our products to new markets; • successfully identify and acquire or invest in businesses, products, or technologies that we believe could complement or expand our platform; and • increase awareness of our brand on a global basis and successfully compete with other companies.
Security incidents and attendant consequences may prevent or cause customers to stop using our services, deter new customers from using our services, and negatively impact our ability to grow and operate our business.
Security incidents and material attendant consequences may prevent or cause customers to stop using our services, deter new customers from using our services, and negatively impact our ability to grow and operate our business.
In addition to data privacy and security laws, we are contractually subject to industry standards adopted by industry groups and may become subject to such obligations in the future.
In addition to data privacy and security laws, we are contractually subject to industry standards adopted by industry groups, we are, or and may become subject to such obligations in the future.
Furthermore, our ability to utilize NOLs of companies that we have acquired or may acquire in the future may be subject to limitations. Under current U.S. tax law, federal NOL carryforwards generated in tax years ending on or prior to December 31, 2017 are only 31 Table of Contents permitted to be carried forward for 20 years.
Furthermore, our ability to utilize NOLs of companies that we have acquired or may acquire in the future may be subject to limitations. Under current U.S. tax law, federal NOL carryforwards generated in tax years ending on or prior to December 31, 2017 are only permitted to be carried forward for 20 years.
The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, especially now that we are no longer an “emerging growth company.” As a public company, we are required to comply with various regulatory and reporting requirements, including those required by the SEC.
General Risks The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, especially now that we are no longer an “emerging growth company.” As a public company, we are required to comply with various regulatory and reporting requirements, including those required by the SEC.
The interest rate on the 2025 Notes is fixed at 1.25% per annum and is payable semi-annually in arrears on January 1 and July 1 of each year, beginning on January 1, 2021. In October 2023, we completed the private offering of 2028 Notes, issuing an aggregate principal amount of $402.5 million of 1.50% convertible senior notes due 2028.
The interest rate on the 2025 Notes is fixed at 1.25% per annum and is payable semi-annually in arrears on January 1 and July 1 of each year. In October 2023, we completed the private offering of 2028 Notes, issuing an aggregate principal amount of $402.5 million of 1.50% convertible senior notes due 2028.
We recognize revenue for our cloud-hosted software subscription fees over the term of our subscription agreement, and our subscriptions are generally one year in duration but can range from monthly to multi-year. As a result, much of our revenue is generated from cloud-hosted software subscriptions entered into during previous periods.
We recognize revenue for our cloud-hosted software subscription fees over the term of our subscription agreement, and our subscriptions are typically one year in duration but can range from monthly to multi-year. As a result, much of our revenue is generated from cloud-hosted software subscriptions entered into during previous periods.
The occurrence of any defects, errors, disruptions in service, or other performance problems with our software, whether in connection with day-to-day operations, upgrades, or otherwise, could result in: • loss of customers; • lost or delayed market acceptance and sales of our products; • delays in payment to us by customers; • injury to our reputation and brand; • legal claims, including warranty and service level agreement claims, against us; or 22 Table of Contents • diversion of our resources, including through increased service and warranty expenses or financial concessions, and increased insurance costs.
The occurrence of any defects, errors, disruptions in service, or other performance problems with our software, whether in connection with day-to-day operations, upgrades, or otherwise, could result in: • loss of customers; • lost or delayed market acceptance and sales of our products; • delays in payment to us by customers; • injury to our reputation and brand; • legal claims, including warranty and service level agreement claims, against us; or • diversion of our resources, including through increased service and warranty expenses or financial concessions, and increased insurance costs.
We have undertaken, and may undertake from time to time in the future, certain restructuring efforts to drive more efficient growth and advance our scaling initiatives. We may not realize, in full or in part, the anticipated benefits and savings from these restructuring efforts. Furthermore, these restructuring efforts may be disruptive to our operations.
We have undertaken, and may undertake from time to time in the future, certain restructuring efforts to drive more efficient growth and advance our scaling initiatives. We may not realize, in full or in part, the anticipated benefits and savings from such restructuring efforts. Furthermore, restructuring efforts may be disruptive to our operations.
The first fiscal quarter of each year is usually our lowest billings and bookings quarter. In fact, billings and bookings during our first fiscal quarter are typically lower than the prior fiscal fourth quarter. We believe that this results from the procurement, budgeting, and deployment cycles of many of our customers, particularly our enterprise customers.
The first fiscal quarter of each year is usually our lowest billings and bookings quarter. Billings and bookings during our first fiscal quarter are typically lower than the prior fiscal fourth quarter. We believe that this results from the procurement, budgeting, and deployment cycles of many of our customers, particularly our enterprise customers.
We currently have offices in Australia, Canada, Chile, Japan, Portugal, the United Kingdom (UK), and the United States. We are continuing to adapt to and develop strategies to address international markets, but there is no guarantee that such efforts will have the desired effect.
We currently have offices in Australia, Canada, Chile, Japan, Portugal, the United Kingdom (“UK”), and the United States. We are continuing to adapt to and develop strategies to address international markets, but there is no guarantee that such efforts will have the desired effect.
We may experience 32 Table of Contents difficulties in managing improvements to our systems, processes, and controls in connection with the implementation of third-party software or otherwise, which could impair our ability to provide products to our customers in a timely manner, limit us to smaller deployments of our products, increase our technical support costs or cause us to be unable to timely and accurately report our financial results in accordance with the rules and regulations of the SEC.
We may experience difficulties in managing improvements to our systems, processes, and controls in connection with the implementation of third-party software or otherwise, which could impair our ability to provide products to our customers in a timely manner, limit us to smaller deployments of our products, increase our technical support costs, or cause us to be unable to timely and accurately report our financial results in accordance with the rules and regulations of the SEC.
Remote work has become more common and has increased risks to our information technology systems and data, as more of our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public locations.
Remote work has increased risks to our information technology systems and data, as more of our employees utilize network connections, computers, and devices outside our premises or network, including working at home, while in transit, and in public locations.
A component of our growth strategy involves the further expansion of our operations and customer base internationally. In each of the fiscal years ended January 31, 2024, 2023, and 2022 customers outside of the United States generated 28%, 24%, and 24%, respectively, of our revenue.
A component of our growth strategy involves the further expansion of our operations and customer base internationally. In each of the fiscal years ended January 31, 2025, 2024, and 2023 customers outside of the United States generated 28%, 28%, and 24%, respectively, of our revenue.
Further, existing tax laws, statutes, rules, regulations, or ordinances could be interpreted differently, changed, repealed, or modified at any time. Any such enactment, interpretation, change, repeal, or modification could adversely affect us, possibly with retroactive effect.
New tax laws, statutes, rules, regulations, or ordinances could be enacted at any time. Further, existing tax laws, statutes, rules, regulations, or ordinances could be interpreted differently, changed, repealed, or modified at any time. Any such enactment, interpretation, change, repeal, or modification could adversely affect us, possibly with retroactive effect.
Broad market and industry fluctuations, as well as general economic, political, regulatory, and market conditions, including the impact of the effects of a general slowdown in the global economy, military conflicts and inflationary pressures, may also negatively impact the market price of our common stock.
Broad market and industry fluctuations, as well as general economic, political, regulatory, and market conditions, including the impact of the effects of a general slowdown in the global economy, geopolitical conflicts, and inflationary pressures, may also negatively impact the market price of our common stock.
We compete on the basis of a number of factors, including: • platform functionality and breadth of offering; • integrations; • performance, security, scalability, and reliability; 18 Table of Contents • real-time response, workflow, and automation capabilities; • focus on modern, contemporary digital services and operations; • brand recognition, reputation, and customer satisfaction; • ease of implementation and ease of use; and • time-to-value, total cost of ownership, and return on investment.
We compete on the basis of a number of factors, including: • platform functionality and breadth of offering; • integrations; • performance, security, scalability, and reliability; • real-time response, workflow, and automation capabilities; • focus on modern, contemporary digital services and operations; • brand recognition, reputation, and customer satisfaction; • ease of implementation and ease of use; and • time-to-value, total cost of ownership, and return on investment.
These strategies may not be successful in continuing to generate sufficient sales opportunities necessary to increase our revenue. A subset of users never convert from the trial or free version of a product to a paid version of such product.
These strategies may not be successful in continuing to generate sufficient sales opportunities necessary to increase our revenue. A subset of users never converts from the trial or free version of a product to a paid version of such product.
Obligations related to data privacy and security (and consumers’ expectations regarding them) are quickly changing, becoming increasingly stringent, and creating uncertainty. Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions.
Obligations related to data privacy and security (and consumers’ data privacy expectations) are quickly changing, becoming increasingly stringent, and creating uncertainty. Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions.
If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations, and financial condition could be materially adversely affected. In addition, responding to any action will likely result in a 38 Table of Contents significant diversion of management’s attention and resources and an increase in professional fees.
If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations, and financial condition could be materially adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees.
Our compliance with these requirements will continue to require that we incur substantial accounting expenses and expend significant management efforts. During the evaluation and testing process of our internal controls, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to certify that our internal control over financial reporting is effective.
Our compliance with these requirements will continue to require that we incur substantial accounting expenses and expend significant management efforts. 46 Table of Contents During the evaluation and testing process of our internal controls, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to certify that our internal control over financial reporting is effective.
From time to time, there may be changes in our management team resulting from the hiring or departure 23 Table of Contents of executives and key employees, which could disrupt our business. Our senior management and key employees are employed on an at-will basis. We currently do not have “key person” insurance on any of our employees.
From time to time, there may be changes in our management team resulting from the hiring or departure of executives and key employees, which could disrupt our business. Our senior management and key employees are employed on an at-will basis. We currently do not have “key person” insurance on any of our employees.
Any acquisition we complete could be viewed negatively by users, developers, partners, or investors, and could have adverse effects on our existing business relationships. In addition, we may not successfully evaluate or utilize acquired technology or accurately forecast the financial impact of an acquisition transaction, including accounting charges.
Any acquisition we complete could be viewed negatively by users, customers, partners, or investors, and could have adverse effects on our existing business relationships. In addition, we may not successfully evaluate or utilize acquired product or technology or accurately forecast the financial impact of an acquisition transaction, including accounting charges.
If we incur more debt, it would result in increased fixed obligations and would also subject us to covenants or other restrictions that could impede our ability to flexibly operate our business. 43 Table of Contents Risks Related to Ownership of Our Common Stock Our stock price may be volatile, and the value of our common stock may decline.
If we incur more debt, it would result in increased fixed obligations and would also subject us to covenants or other restrictions that could impede our ability to flexibly operate our business. Risks Related to Ownership of Our Common Stock Our stock price may be volatile, and the value of our common stock may decline.
Item 1A. Risk Factors Our business involves significant risks, some of which are described below. You should carefully consider the following risks, together with all of the other information in this Form 10-K, including our consolidated financial statements and the related notes included elsewhere in this Form 10-K.
Item 1A. Risk Factors Our business involves significant risks, some of which are described below. You should carefully consider the following risks, together with all of the other information in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K.
Additionally, where an AI/ML model ingests personal data and makes connections using such data, those technologies may reveal other personal or sensitive data generated by the model. We rely upon free trials of our products and other inbound lead-generation strategies to drive our sales and revenue.
Additionally, where an AI/machine learning model ingests personal data and makes connections using such data, those technologies may reveal other personal or sensitive data generated by the model. We rely upon free trials of our products and other inbound lead-generation strategies to drive our sales and revenue.
Additionally, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program. In addition, our reliance on third-party service providers could introduce new cybersecurity risks and vulnerabilities, including supply-chain attacks, and other threats to our business operations.
Additionally, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program. In addition, our reliance on third parties could introduce new cybersecurity risks and vulnerabilities, including supply-chain attacks, and other threats to our business operations.
In addition to the other risks described herein, factors that may affect our operating results include the following: • health epidemics or pandemics; • fluctuations in demand for or pricing of our platform due to customers reducing their expenditures, whether as a cost-cutting measure or a result of their insolvency or bankruptcy, and whether due to inflationary pressures, rising global interest rates, bank failures, or other reasons; • our ability to attract new customers; • our ability to retain our existing customers; • customer expansion rates; • the pricing and quantity of subscriptions renewed; • the timing of our customer purchases; • fluctuations or delays in purchasing decisions in anticipation of new products or product enhancements by us or our competitors; • changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions; • potential and existing customers choosing our competitors’ products or developing their own solutions in-house; • our ability to control costs, including our operating expenses; • the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses, including commissions; • the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments, and other non-cash charges; • the amount and timing of costs associated with recruiting, training, and integrating new employees and retaining and motivating existing employees; • the effects of acquisitions and their integration; • general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers participate; • the impact of new accounting pronouncements; • changes in the competitive dynamics of our market, including consolidation among competitors or customers; • significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform; and • awareness of our brand and our reputation in our target markets. 20 Table of Contents Any of these and other factors, or the cumulative effect of some of these factors, may cause our results of operations to vary significantly.
In addition to the other risks described herein, factors that may affect our operating results include the following: • fluctuations in demand for or pricing of our platform due to customers reducing their expenditures, whether as a cost-cutting measure or a result of their insolvency or bankruptcy, and whether due to inflationary pressures, rising global interest rates, bank failures, or other reasons; • our ability to attract new customers; • our ability to retain our existing customers; • customer expansion rates; • the pricing and quantity of subscriptions renewed; • the timing of our customer purchases; • fluctuations or delays in purchasing decisions in anticipation of new products or product enhancements by us or our competitors; • changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions; • potential and existing customers choosing our competitors’ products or developing their own solutions in-house; • our ability to control costs, including our operating expenses; • the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses, including commissions; • the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments, and other non-cash charges; • the amount and timing of costs associated with recruiting, training, and integrating new employees and retaining and motivating existing employees; • the effects of acquisitions and their integration; • general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers participate; • the impact of new accounting pronouncements; • changes in the competitive dynamics of our market, including consolidation among competitors or customers; • significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform; • awareness of our brand and our reputation in our target markets; and • health epidemics or pandemics.
If our offerings draw controversy due to their perceived or actual impact on society, such as AI solutions that have unintended consequences or are controversial because of their impact on human rights, privacy, employment, or other social, economic, or political issues, or if we are unable to develop effective internal policies and frameworks relating to the responsible development and use of AI models and systems, we may experience brand, reputational, and/or competitive harm, or could face legal liability.
If our offerings draw controversy due to their perceived or actual impact on society, such as Emerging AI Technologies solutions that have unintended consequences or are controversial because of their impact on critical infrastructure, human rights, privacy, employment, or other social, economic, or political issues, or if we are unable to develop and implement effective internal policies and frameworks relating to the responsible development and use of AI models and systems, we may experience brand, reputational, and/or competitive harm, or could face legal liability.
The successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results 26 Table of Contents in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on our business.
The successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on our business.
We have in the past and may in the future become subject to legal proceedings and claims that arise in the ordinary course of business, such as claims brought by our customers in connection with commercial disputes or employment claims made by our current or former employees.
We have in the past and may in the future become subject to legal proceedings and claims that arise in the ordinary course of business, such as claims brought by our customers in connection with commercial disputes, employment claims made by our current or former employees or whistleblower and other litigation and claims.
Enforcement actions and sanctions could harm our business, reputation, results of operations, and financial condition. Increased government scrutiny of the technology industry could negatively affect our business. The technology industry is subject to intense media, political and regulatory scrutiny, which exposes us to government investigations, legal actions, and penalties.
Enforcement actions and sanctions could harm our business, reputation, results of operations, and financial condition. 37 Table of Contents Increased government scrutiny of the technology industry could negatively affect our business. The technology industry is subject to intense media, political, and regulatory scrutiny, which exposes us to government investigations, legal actions, and penalties.
If we elect to satisfy our conversion obligation on the Notes solely in shares of our common stock upon 44 Table of Contents conversion of the Notes, we will be required to deliver the shares of our common stock, together with cash for any fractional share, on the second business day following the relevant conversion date.
If we elect to satisfy our conversion obligation on the Notes solely in shares of our common stock upon conversion of the Notes, we will be required to deliver the shares of our common stock, together with cash for any fractional share, on the second business day following the relevant conversion date.
If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar); litigation (including class-action claims) and mass arbitration demands; additional reporting requirements and/or oversight; bans on processing personal data; and orders to destroy or not use personal data.
If we or the third parties with whom we work fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar); litigation (including class-action claims) and mass arbitration demands; additional reporting requirements and/or oversight; bans or restrictions on processing personal data; and orders to destroy or not use personal data.
In addition, in connection with the pricing of the 2025 Notes and the 2028 Notes, we entered into capped call transactions (the “Capped Calls”) with certain financial institutions (the “Option Counterparties”).
In addition, in connection with the issuance of the 2025 Notes and the 2028 Notes, we entered into capped call transactions (the “Capped Calls”) with certain financial institutions (the “Option Counterparties”).
Responding to such claims, regardless of their merit, can be time consuming, costly to defend, and damaging to our reputation and brand. 34 Table of Contents We use open-source software in our products, which could subject us to litigation or other actions. We use open-source software in our products.
Responding to such claims, regardless of their merit, can be time consuming, costly to defend, and damaging to our reputation and brand. We use open-source software in our products, which could subject us to litigation or other actions. We use open-source software in our products.
We may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations. Moreover, despite our efforts, our personnel or third parties on whom we rely, may fail to comply with such obligations, which could negatively impact our business operations.
We may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations. Moreover, despite our efforts, our personnel or third parties with whom we work, may fail to comply with such obligations, which could negatively impact our business operations.
Any decreased use of our products and solutions or limitation on our ability to export or sell our products and solutions would likely adversely affect our business, financial condition and results of operations, and growth prospects. Servicing our debt may require a significant amount of cash.
Any decreased use of our products and solutions or limitation on our ability to export or sell our products and solutions would likely adversely affect our business, financial condition and results of operations, and growth prospects. 39 Table of Contents Servicing our debt may require a significant amount of cash.
Any of the previously identified or similar threats could cause a security incident, production downtime or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our or our customers’ sensitive data or our information technology systems, or those of the third parties upon whom we rely.
Any of the previously identified or similar threats could cause a security incident, production downtime, or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our or our customers’ sensitive data or our information technology systems, or those of the third parties with whom we work.
In addition, noncompliance with 35 Table of Contents anti-corruption, anti-bribery, or anti-money laundering laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties or injunctions, suspension or debarment from contracting with certain persons, reputational harm, adverse media coverage, and other collateral consequences.
In addition, noncompliance with anti-corruption, anti-bribery, or anti-money laundering laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties or injunctions, suspension or debarment from contracting with certain persons, reputational harm, adverse media coverage, and other collateral consequences.
In addition, we expect to continue to expend substantial financial and other resources on: • sales and marketing, including expansion to serve customers internationally; • our technology infrastructure, including systems architecture, scalability, availability, performance, and security; • product development, including investments in our product development team and the development of new products and new functionality for our platform; • acquisitions or strategic investments; • international expansion; and • general administration, including increased legal, accounting, and compliance expenses associated with being a public company.
In addition, we expect to continue to expend substantial financial and other resources on: • sales and marketing, including expansion to serve customers internationally; • our technology infrastructure, including systems architecture, scalability, availability, performance, and security; • product development, including investments in our product development team and the development of new products and new functionality for our platform; • acquisitions or strategic investments; • international expansion; and • general administration, including legal, accounting, and compliance expenses associated with operating as public company.
Such actions could limit or reduce the quality of internet access services and have an adverse impact on the quality of the services we provide to our customers. We provide service-level commitments under our cloud-hosted subscription agreements.
Such actions could limit or reduce the quality of internet access services and have an adverse impact on the quality of the services we provide to our customers. 27 Table of Contents We provide service-level commitments under our cloud-hosted subscription agreements.
For example, in the third quarter of fiscal year 2021 we acquired Rundeck, a leading provider of DevOps automation for enterprise, in the first quarter of fiscal year 2023, we acquired Catalytic, a provider of enterprise-wide process automation, and in the fourth quarter of fiscal year 2024, we acquired Jeli, a provider of incident analysis for 42 Table of Contents enterprises.
For example, in the third quarter of fiscal year 2021, we acquired Rundeck, a leading provider of DevOps automation for enterprise, in the first quarter of fiscal year 2023, we acquired Catalytic, a provider of enterprise-wide process automation, and in the fourth quarter of fiscal year 2024, we acquired Jeli, a provider of incident analysis for enterprises.
We rely upon our marketing strategy of offering a 14-day free trial and “freemium” plan, a free version of PagerDuty, for customers with up to five users, and an open source version of Rundeck Automation as well as other inbound, lead-generation strategies to generate new sales opportunities. Most of our customers start with the free version of our products.
We rely upon our marketing strategy of offering a 14-day free trial and “freemium” plan, a free version of PagerDuty and an open source version of Rundeck Automation as well as other inbound, lead-generation strategies to generate new sales opportunities. Most of our customers start with the free version of our products.
Government demand and payment for our offerings are affected by public 39 Table of Contents sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our offerings. Further, governmental and highly regulated entities may demand contract terms that differ from our standard arrangements and may require expensive and time- consuming compliance efforts.
Government demand and payment for our offerings are affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our offerings. Further, governmental and highly regulated entities may demand contract terms that differ from our standard arrangements and may require expensive and time- consuming compliance efforts.
All of these efforts will require us to invest significant financial and other resources. Our business and operating results will be harmed if our sales and marketing efforts do not generate significant increases in revenue.
All of these efforts have required and will require us to continue to invest significant financial and other resources. Our business and operating results will be harmed if our sales and marketing efforts do not generate significant increases in revenue.
Our failure to address concerns and regulation relating to the responsible use of AI could slow adoption of AI in our products and services or cause reputational and/or financial harm. If we cannot maintain our company culture as we grow, our success and our business may be harmed.
Our failure to address concerns and regulation relating to the responsible use of AI could slow adoption of both Emerging AI Technologies and traditional AI in our products and services or cause reputational and/or financial harm. If we cannot maintain our company culture as we grow, our success and our business may be harmed.
For example, the California Consumer Privacy Act of 2018 (“CCPA”) applies to personal data of consumers, business representatives, and employees who are California residents, and requires businesses to provide specific disclosures in privacy notices and honor requests such individuals to exercise certain privacy rights, such as those noted below.
For example, the California Consumer Privacy Act of 2018 (“CCPA”) applies to personal data of consumers, business representatives, and employees who are California residents, and requires businesses to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights.
Some 37 Table of Contents European regulators have ordered certain companies to suspend or permanently cease certain transfers of personal data out of Europe for allegedly violating the GDPR’s cross-border data transfer limitations.
Some European regulators have ordered certain companies to suspend or permanently cease certain transfers of personal data out of Europe for allegedly violating the GDPR’s cross-border data transfer limitations.
For example, some companies that compete with certain components of our offerings include ServiceNow, Atlassian and Splunk (which has announced an agreement to be acquired by Cisco). In addition, new entrants not currently considered to be competitors may enter the space through product development, acquisitions, partnerships, or strategic relationships.
For example, some companies that compete with certain components of our offerings include ServiceNow, Atlassian, and Splunk (acquired by Cisco). In addition, new entrants not currently considered to be competitors may enter the space through product development, acquisitions, partnerships, or strategic relationships.
We also face increased compliance costs associated with growth, the expansion of our customer base, and being a public company. Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses.
We also face increased compliance costs associated with growth, and the expansion of our customer base. Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses.
If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive data (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in our operations (including availability of data); financial loss; and other similar harms.
If we (or a third party with whom we work) experience a security incident or are perceived to have experienced a security incident, we may experience material adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive data (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management attention; interruptions in our operations (including availability of data); financial loss; and other similar harms.
Failure to preserve our culture negatively affects our ability to retain and recruit personnel, which is critical to our growth, and to effectively focus on and pursue our corporate objectives. As we continue to grow, we may find it difficult to attract and retain qualified diverse talent if we do not maintain a culture that is reflective of our talent.
Failure to preserve our culture negatively affects our ability to retain and recruit personnel, which is critical to our growth, and to effectively focus on and pursue our corporate objectives. As we continue to grow, we may find it difficult to attract and retain high-performing top talent if we do not maintain a culture that is reflective of our talent.
Our agreements with customers and other third parties may include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, inadequate data privacy and security, damages caused by us to property or persons, or other liabilities relating to or arising from our platform or other contractual obligations.
Our agreements with customers and other third parties may include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement (including for the use of Emerging AI Technologies), inadequate data privacy and security, damages caused by us to property or persons, or other liabilities relating to or arising from our platform or other contractual obligations.
In the event the conditional conversion feature of the Notes is triggered, holders of Notes will be entitled to convert the Notes at any time during specified periods at their option.
In the event the conditional conversion feature of the applicable series of Notes is triggered, holders of such series of Notes will be entitled to convert the Notes at any time during specified periods at their option.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including, for example, professional services firms, cybersecurity consultants, managed cybersecurity service providers, penetration testing firms, and as needed, forensics investigators.
Biggest changeWe use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including, for example, professional services firms, cybersecurity consultants, managed cybersecurity service providers, and penetration testing firms. 47 Table of Contents We also use third-party service providers to perform a variety of functions throughout our business, such as application providers, hosting companies, and various supply chain resources.
Cybersecurity Risk management and strategy We have implemented and maintain various information security processes designed to identify, assess, and manage material risks from cybersecurity threats to our critical computer networks, third party hosted services, communications systems, hardware and software, and our critical data, including intellectual property, confidential information that is proprietary, strategic, or competitive in nature, customer data, and the personal information of our employees (collectively, “Information Systems and Data”).
Cybersecurity Risk management and strategy We have implemented and maintain various information security processes designed to identify, assess, and manage material risks from cybersecurity threats to our critical computer networks, third party hosted services, communications systems, hardware and software, and our critical data, including intellectual property, confidential information that is proprietary, strategic, or competitive in nature, customer data, and personal information (collectively, “Information Systems and Data”).
Company management, including the CTO, CISO, and CIO, is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into the Company’s overall risk management strategy, and 49 Table of Contents communicating key priorities to relevant personnel. Management is also responsible for approving budgets for spending on cybersecurity, helping prepare for cybersecurity incidents, and approving cybersecurity processes.
Company management, including the CTO, CISO, and CIO, is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into the Company’s overall risk management strategy, and communicating key priorities to relevant personnel. Management is also responsible for approving budgets for spending on cybersecurity, helping prepare for cybersecurity incidents, and approving cybersecurity processes.
Removed
We also use third-party service providers to perform a variety of functions throughout our business, such as application providers, hosting companies, and various supply chain resources.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters is located in San Francisco, California, and consists of approximately 42,113 square feet of space under a lease that is expected to expire in fiscal 2026. We also have office locations in Atlanta, Georgia; Toronto, Canada; Santiago, Chile; London, England; Sydney, Australia; Lisbon, Portugal; and Tokyo, Japan.
Biggest changeItem 2. Properties Our corporate headquarters is located in San Francisco, California, and consists of approximately 42,118 square feet of space under a lease that expires in fiscal 2029. We also have office locations in Atlanta, Georgia; Toronto, Canada; Santiago, Chile; London, England; Sydney, Australia; Lisbon, Portugal; and Tokyo, Japan.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows, or financial condition. Item 4. Mine Safety Disclosures Not applicable. 50 Table of Contents Part II.
Biggest changeWe are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows, or financial condition.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission, or the SEC, for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act.
Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans The information required by this Item is incorporated by reference to the definitive Proxy Statement for our 2025 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after January 31, 2025. 49 Table of Contents Stock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission, or the SEC, for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock has been listed on the New York Stock Exchange (NYSE) under the symbol “PD” since April 11, 2019. Prior to that date, there was no public trading market for our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock has been listed on the New York Stock Exchange (“NYSE”) under the symbol “PD” since April 11, 2019. Prior to that date, there was no public trading market for our common stock.
The following graph compares (i) the cumulative total stockholder return on our common stock from April 11, 2019 (the date our common stock commenced trading on the NYSE through January 31, 2024 with (ii) the cumulative total return of the Standard & Poor (S&P) 500 Index and S&P Software & Services Select Industry Index over the same period, assuming the investment of $100 in our common stock and in both of the other indices on April 11, 2019 and the reinvestment of dividends.
The following graph compares: (i) the cumulative total stockholder return on our common stock from April 11, 2019 (the date our common stock commenced trading on the NYSE) through January 31, 2025; with (ii) the cumulative total return of the Standard & Poor (“S&P”) 500 Index, and the S&P Software & Services Select Industry Index over the same period, assuming the investment of $100 in our common stock and in both of the other indices on April 11, 2019 and the reinvestment of dividends.
Holders of Record As of January 31, 2024, we had 25 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Holders of Record As of January 31, 2025, we had 22 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
The graph uses the closing market price on April 11, 2019 of $38.25 per share as the initial value of our common stock.
The graph uses the closing market price on April 11, 2019 of $38.25 per share as the initial value of our common stock. As discussed above, we have never declared or paid a cash dividend on our common stock and do not anticipate declaring or paying a cash dividend in the foreseeable future.
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As discussed above, we have never declared or paid a cash dividend on our common stock and do not anticipate declaring or paying a cash dividend in the foreseeable future. 51 Table of Contents Unregistered Sales of Equity Securities and Use of Proceeds None. Item 6. [Reserved]
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Unregistered Sales of Equity Securities and Use of Proceeds Unregistered Sales of Equity Securities None.
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Use of Proceeds None. 50 Table of Contents Issuer Purchases of Equity Securities The following table presents information with respect to our repurchases of common stock during the three months ended January 31, 2025: Period Total number of shares purchased (1) Average price paid per share (2) Total number of shares purchased as part of publicly announced program (1) Approximate dollar value of shares that may yet be purchased under publicly announced program (in thousands) (1) November 1 - 30, 2024 79,062 $ 18.41 79,062 $ — December 1 - 31, 2024 — $ — — $ — January 1 - 31, 2025 — $ — — $ — Total 79,062 79,062 (1) In May 2024, our Board of Directors authorized a stock repurchase program of up to $100.0 million of our common stock.
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Share repurchases under share repurchase program may be made from time to time on the open market, pursuant to Rule 10b5-1 trading plans, or other legally permissible means. The share repurchase program does not obligate us to acquire a specified number of shares, and may be suspended, modified, or terminated at any time, without prior notice.
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The number of shares repurchased was dependent on market conditions and other factors. The share repurchase program was completed in November 2024, as the dollar value of shares to be repurchased as authorized by the Board of Directors was reached.
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See Note 12, Common Stock and Stockholders’ Equity elsewhere this Annual Report on Form 10-K for additional information related to share repurchases. (2) Average price paid per share excludes cash paid for commissions. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(Provision for) benefit from income taxes also includes the benefit associated with the reduction in our valuation allowance from the increase in the deferred tax liability associated with acquired intangible assets from our acquisitions. 58 Table of Contents Results of Operations The following table sets forth our consolidated statements of operations data for the periods indicated: Year Ended January 31, 2024 2023 2022 (in thousands) Revenue $ 430,699 $ 370,793 $ 281,396 Cost of revenue (1) 77,832 70,434 48,361 Gross profit 352,867 300,359 233,035 Operating expenses: Research and development (1) 139,769 134,876 95,690 Sales and marketing (1) 196,769 195,622 161,624 General and administrative (1) 112,575 99,238 77,432 Total operating expenses 449,113 429,736 334,746 Loss from operations (96,246) (129,377) (101,711) Interest income 22,101 5,383 762 Interest expense (6,500) (5,433) (5,398) Gain on partial extinguishment of convertible senior notes 3,699 — — Other expense, net (433) (637) (573) Loss before benefit from (provision for) income taxes (77,379) (130,064) (106,920) Benefit from (provision for) income taxes 12 839 (535) Net loss $ (77,367) $ (129,225) $ (107,455) Net loss attributable to redeemable non-controlling interest (2,178) (802) — Net loss attributable to PagerDuty, Inc. $ (75,189) $ (128,423) $ (107,455) Adjustment attributable to redeemable non-controlling interest 6,568 — — Net loss attributable to PagerDuty, Inc. common stockholders $ (81,757) $ (128,423) $ (107,455) ______________ (1) Includes stock-based compensation expense as follows: Year Ended January 31, 2024 2023 2022 (in thousands) Cost of revenue $ 7,586 $ 6,827 $ 3,751 Research and development 44,800 39,012 23,764 Sales and marketing 30,345 29,804 19,012 General and administrative 44,421 34,264 23,506 Total $ 127,152 $ 109,907 $ 70,033 59 Table of Contents The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue: Year Ended January 31, 2024 2023 2022 Revenue 100 % 100 % 100 % Cost of revenue 18 19 17 Gross profit 82 81 83 Operating expenses: Research and development 32 36 34 Sales and marketing 46 53 57 General and administrative 26 27 28 Total operating expenses 104 116 119 Loss from operations (22) (35) (36) Interest income 5 1 — Interest expense (2) (1) (2) Gain on partial extinguishment of convertible senior notes 1 — — Other expense, net — — — Loss before benefit from (provision for) income taxes (18) (35) (38) Benefit from (provision for) income taxes — — — Net loss (18) % (35) % (38) % Net loss attributable to redeemable non-controlling interest (1) — — Net loss attributable to PagerDuty, Inc.
Biggest changeThe dollar-based net retention rate was as follows as of the dates indicated: Last 12 months ended January 31, 2025 2024 2023 Dollar-based net retention rate 106 % 107 % 120 % 54 Table of Contents Results of Operations The following table sets forth our consolidated statements of operations data for the periods indicated and as a percentage of revenue (in thousands, except percentages): Year ended January 31, 2025 2024 Revenue $ 467,499 100.0 % $ 430,699 100.0 % Cost of revenue (1) 79,665 17.0 % 77,832 18.1 % Gross profit 387,834 83.0 % 352,867 81.9 % Operating expenses: Research and development (1) 141,489 30.3 % 139,769 32.5 % Sales and marketing (1) 201,821 43.2 % 196,769 45.7 % General and administrative (1) 104,296 22.3 % 112,575 26.1 % Total operating expenses 447,606 95.7 % 449,113 104.3 % Loss from operations (59,772) (12.8) % (96,246) (22.3) % Interest income 27,492 5.9 % 22,101 5.1 % Interest expense (9,258) (2.0) % (6,500) (1.5) % Gain on partial extinguishment of convertible senior notes — — % 3,699 0.9 % Other expense, net (215) — % (433) (0.1) % Loss before (provision for) benefit from income taxes (41,753) (8.9) % (77,379) (18.0) % (Provision for) benefit from income taxes (1,783) (0.4) % 12 — % Net loss $ (43,536) (9.3) % $ (77,367) (18.0) % Net loss attributable to redeemable non-controlling interest (801) (0.2) % (2,178) — % Net loss attributable to PagerDuty, Inc. $ (42,735) (9.1) % $ (75,189) (17.5) % Less: Adjustment attributable to redeemable non-controlling interest 11,725 2.5 % 6,568 1.5 % Net loss attributable to PagerDuty, Inc. common stockholders $ (54,460) (11.6) % $ (81,757) (19.0) % ______________ (1) Includes stock-based compensation expense as follows (in thousands): Year ended January 31, 2025 2024 Cost of revenue $ 5,984 $ 7,586 Research and development 44,691 44,800 Sales and marketing 31,185 30,345 General and administrative 44,350 44,421 Total $ 126,210 $ 127,152 55 Table of Contents Revenue We generate revenue primarily from cloud-hosted software subscription fees.
Sustaining Product Innovation and Technology Leadership Our success is dependent on our ability to sustain product innovation and technology leadership in order to maintain our competitive advantage. We believe that we have built highly differentiated platform that will position us to further extend the adoption of our products.
Sustaining Product Innovation and Technology Leadership Our success is dependent on our ability to sustain product innovation and technology leadership in order to maintain our competitive advantage. We believe that we have built a highly differentiated platform that will position us to further extend the adoption of our products.
Additionally, research and development expenses include outside services, depreciation of equipment used in research and development activities, acquisition-related expenses, and allocated overhead costs. We expect that our research and development expenses will increase in dollar value as our business grows.
Additionally, research and development expenses include outside services, depreciation of equipment used in research and development activities, acquisition-related expenses, and allocated overhead costs. We expect that our recurring research and development expenses will increase in dollar value as our business grows.
We expect that our sales and marketing expenses will generally increase in dollar value and continue to be our largest operating expense for the foreseeable future as we expand our sales and marketing efforts.
We expect that our recurring sales and marketing expenses will generally increase in dollar value and continue to be our largest operating expense for the foreseeable future as we expand our sales and marketing efforts.
Overview PagerDuty is a global leader in digital operations management, enabling customers to achieve operational efficiency at scale and transform critical work for modern enterprises.
Overview PagerDuty, Inc. is a global leader in digital operations management, enabling customers to achieve operational efficiency at scale and transform critical work for modern enterprises.
As such, we have developed a loyal customer base, with total ARR churn representing less than 5% of beginning ARR for the fiscal year ended January 31, 2024. Our ARR churn rate represents lost revenue from customers that were no longer contributing revenue at the end of the current period but did contribute revenue in the equivalent prior year period.
As such, we have developed a loyal customer base, with total ARR churn representing less than 5% of beginning ARR for the fiscal year ended January 31, 2025. Our ARR churn rate represents lost revenue from customers that were no longer contributing revenue at the end of the current period but did contribute revenue in the equivalent prior year period.
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.
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 customers have constituted a greater share of our revenue.
Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. Revenue Recognition We enter into contracts with our customers that may include promises to transfer multiple services, software licenses, support and professional services.
Accordingly, these are the estimates we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. Revenue Recognition We enter into contracts with our customers that may include promises to transfer multiple services, software licenses, support, and professional services.
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.
We define ARR as the annualized recurring revenue 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.
We intend to grow our sales team to target expansion within our mid-market and enterprise customers and to attract new customers. We expect to continue to make focused investments in marketing to drive brand awareness and enhance the effectiveness of our self-service, low friction customer acquisition model.
We intend to grow our sales team to target expansion within our enterprise customers and to attract new customers. We expect to continue to make focused investments in marketing to drive brand awareness and enhance the effectiveness of our self-service, low friction customer acquisition model.
For a discussion of the year ended January 31, 2023 compared to the year ended January 31, 2022, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended January 31, 2023.
For a discussion of the year ended January 31, 2024 compared to the year ended January 31, 2023, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended January 31, 2024.
We then calculate the ARR from these same customers as of the current period end, or Current Period ARR. Current Period ARR includes any expansion and is net of downgrades or churn over the last 12 months but excludes ARR from new customers in the current period.
We then calculate the ARR from these same customers as of the current period end (“Current Period ARR”). Current Period ARR includes any expansion and is net of downgrades or churn over the last 12 months but excludes ARR from new customers in the current period.
Gross Profit and Gross Margin Gross profit represents revenue less cost of revenue. Gross margin is gross profit expressed as a percentage of revenue.
Gross profit represents revenue less cost of revenue. Gross margin is gross profit expressed as a percentage of revenue.
We will continue to invest additional resources in our platform infrastructure and our customer support and success organizations to expand the capability of our platform and ensure that our customers 56 Table of Contents are realizing the full benefit of our offerings. The level and timing of investment in these areas could affect our cost of revenue in the future.
We will continue to invest additional resources in our platform infrastructure and our customer support and success organizations to expand the capability of our platform and ensure that our customers are realizing the full benefit of our offerings. The level and timing of investment in these areas could affect our cost of revenue in the future.
Significant judgment is required in arriving at this period of benefit. We determined the period of benefit by taking into consideration our customer contracts, technology, and other factors. Business Combinations and Valuation of Intangible Assets We apply the acquisition method of accounting for business combinations.
Significant judgment is required in arriving at this period of benefit. We determined the period of benefit by taking into consideration our customer contracts, technology, and other factors. 64 Table of Contents Business Combinations and Valuation of Intangible Assets We apply the acquisition method of accounting for business combinations.
GAAP measures as part of our overall assessment of our liquidity, including the preparation of our annual operating budget and quarterly forecasts and to evaluate the effectiveness of our business strategies, and to assess its liquidity.
GAAP measures as part of our overall assessment of our liquidity, including the preparation of our annual operating budget and quarterly forecasts and to evaluate the effectiveness of our business strategies.
We believe we will meet longer-term expected future cash requirements and obligations, through a combination of cash flows from operating activities and available cash and short-term investment balances.
We believe we will meet long-term expected future cash requirements and obligations through a combination of cash flows from operating activities and available cash and short-term investment balances.
These estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost savings expected to be derived from acquiring an asset.
These estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost savings expected to be derived from acquiring an asset. These estimates are inherently uncertain and unpredictable.
Our 10 largest customers represented approximately 9% of our revenue for the fiscal year ended January 31, 2024, and no single customer represented more than 10% of our revenue in the same period, highlighting the breadth of our customer base. We serve a vital role in our customers’ digital operations and grow with them as their needs expand.
Our 10 largest customers represented approximately 1% of our revenue for the fiscal year ended January 31, 2025, and no single customer represented more than 10% of our revenue in the same period, highlighting the breadth of our customer base. We serve a vital role in our customers’ digital operations and grow with them as their needs expand.
Cost of Revenue Cost of revenue primarily consists of expenses related to providing our platform to customers, including personnel expenses for operations and global support, payments to our third-party cloud infrastructure providers for hosting our software, payment processing fees, amortization of capitalized internal-use software costs, amortization of acquired developed technology, and allocated overhead costs for facilities, information technology, and other allocated overhead costs.
Cost of Revenue and Gross Margin Cost of revenue primarily consists of expenses related to providing our platform to customers, including personnel expenses for operations and global support, payments to our third-party cloud infrastructure providers for hosting our software, payment processing fees, amortization of capitalized software costs, amortization of acquired developed technology, and allocated overhead costs for facilities, information technology, and other allocated overhead costs.
GAAP, we believe the following non-GAAP financial measures are useful in evaluating our operating performance. We use the below referenced non-GAAP financial information, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes.
GAAP” or “GAAP”), we believe the following non-GAAP financial measures are useful in evaluating our operating performance. We use the below referenced non-GAAP financial information, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes.
We generally bill monthly subscriptions monthly and subscriptions with terms of greater than one year annually in advance. We expand within our existing customer base by adding more users, creating additional use cases, and upselling higher priced packages and additional products. Once our platform is deployed, we typically see significant expansion within our customer base.
We generally bill monthly subscriptions on a monthly basis and subscriptions with terms of greater than one year annually in advance. We expand within our existing customer base by adding more users, creating additional use cases, and upselling higher priced packages and additional products. Once our platform is deployed, we typically see increased expansion within our customer base.
Our dollar-based net retention rate compares our ARR from the same set of customers across comparable periods. We calculate dollar-based net retention rate as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period end, or Prior Period ARR.
Our dollar-based net retention rate compares our ARR from the same set of customers across comparable periods. We calculate dollar-based net retention rate as of a period end by starting with the ARR from the cohort of all paid customers as of 12 months prior to such period end (“Prior Period ARR”).
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 incidents.
Today, we collect data and digital signals from virtually any software-enabled system or device and leverage AI and machine learning to correlate, process, and predict opportunities and incidents.
Our subscriptions are typically one year in duration but can range from monthly to multi-year. Subscription fees are driven primarily by the number of customers, the number of users per customer, and the level of subscription purchased. We generally invoice customers in advance in annual installments for subscriptions to our software.
We also generate revenue from term-license software subscription fees. Our subscriptions are typically one year in duration but can range from monthly to multi-year. Subscription fees are driven primarily by the number of customers, the number of users per customer, and the level of subscription purchased. We generally invoice customers in advance in annual installments for subscriptions to our software.
We expect that our general and administrative expenses will increase in dollar value as our business grows. However, we expect that our general and administrative expenses will decrease as a percentage of our revenue over the longer term as we expect our investments to allow for improved efficiency for future growth in the business.
However, we expect that our general and administrative expenses will decrease as a percentage of our revenue over the longer term, as we expect our investments to allow for improved efficiency for future growth in the business.
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 Jeli and Catalytic, to the extent applicable, beginning on the respective acquisition dates of November 15, 2023 and March 8, 2022.
In addition, we are continually seeking to improve our methodology, which may result in future changes to our key metrics. 53 Table of Contents Our key metrics include the results of Jeli, Inc. (“Jeli”) and Catalytic, to the extent applicable, beginning on the respective acquisition dates of November 15, 2023 and March 8, 2022.
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.
While these metrics 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 using the best available data at period end, and therefore, these metrics are subject to change as new information becomes available.
Our dollar-based net retention rate was 107% for the fiscal year ended January 31, 2024. 53 Table of Contents We have an efficient operating model, which comes from a combination of our cloud-native architecture, optimal utilization of our third-party hosting providers, and prudent approach to headcount expansion.
Our dollar-based net retention rate was 106% for the fiscal year ended January 31, 2025. We have an efficient operating model, which comes from a combination of our cloud-native architecture, optimal utilization of our third-party hosting providers, and prudent approach to headcount expansion.
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 ARR, are indicators of our market penetration, particularly within enterprise 55 Table of Contents accounts, the growth of our business, and our potential future business opportunities.
Number of Customers We believe that the number of customers using our platform, particularly those that have subscription agreements for more than $100.0 thousand in ARR, are indicators of our market penetration, particularly within enterprise accounts, the growth of our business, and our potential future business opportunities.
The last day of our fiscal year is January 31. Our fiscal quarters end on April 30, July 31, October 31 and January 31. In this section, we discuss the results of our operations for the year ended January 31, 2024 compared to the year ended January 31, 2023.
Our fiscal quarters end on April 30, July 31, October 31 and January 31. In this section, we discuss the results of our operations for the year ended January 31, 2025 compared to the year ended January 31, 2024.
Actual results could differ significantly from the estimates made by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. We believe that the accounting policies described below involve a greater degree of judgment and complexity.
To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. We believe that the accounting policies described below involve a greater degree of judgment and complexity.
Sales and marketing Sales and marketing expenses consist primarily of personnel costs, costs of general marketing activities and promotional activities, travel related expenses, amortization of acquired intangible assets, allocated overhead costs, and bad debt expense.
Sales and marketing : Sales and marketing expenses consist primarily of personnel costs, costs of general marketing and promotional activities, travel-related expenses, amortization of acquired intangible assets, allocated overhead costs, and credit loss expense.
Gain on Partial Extinguishment of Convertible Senior Notes During the year ended January 31, 2024, we recorded a gain on partial extinguishment of convertible senior notes as a result of the October 2023 partial extinguishment of the 2025 Notes. Refer to Note 9, “Debt and Financing Arrangements” for additional details.
Gain on partial extinguishment of convertible senior notes : During the year ended January 31, 2024, we recorded a gain on partial extinguishment of convertible senior notes as a result of the October 2023 partial extinguishment of the 2025 Notes. Refer to Note 9.
Our customers use our products across a broad range of use cases such as Engineering, IT Operations, Security, and Customer Service. Of these customers, 804 customers contribute annual recurring revenue (“ARR”) in excess of $100,000, and 58 customers contribute ARR in excess of $1,000,000.
Our customers use our products across a broad range of use cases such as engineering, IT operations, security, and customer service. Of these customers, 849 customers contribute annual recurring revenue (“ARR”) in excess of $100.0 thousand, and 72 customers contribute ARR in excess of $1.0 million.
The principal limitation of these non-GAAP financial measures is that they exclude significant expenses that are required by U.S. GAAP to be recorded in our financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by our management about which expenses are excluded or included in determining these non-GAAP financial measures.
GAAP to be recorded in our financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by our management about which expenses are excluded or included in determining these non-GAAP financial measures.
Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, adverse effects on our business and general economic conditions due to those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this Form 10-K.
Factors that could cause or contribute to such differences include, but are not limited to, adverse effects on our business and general economic conditions due to those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this Form 10-K. The last day of our fiscal year is January 31.
The fair value of our market-based performance stock unit (PSU) awards, for which vesting is dependent upon the relative growth of the per share price of the Company’s common stock as compared to the S&P Software & Services Select Index over the one-year performance period, is measured on the grant date based on estimated projections of our stock price over the performance period.
We occasionally grant market-based performance stock unit (“PSU”) awards, for which vesting is dependent upon the relative growth of the per share price of the Company’s common stock as compared to the S&P Software & Services Select Index over the one-year performance period.
These estimates are inherently uncertain and unpredictable Acquired intangible assets consist of identifiable intangible assets, including developed technology, customer relationships, and tradename, resulting from our acquisition. Acquired intangible assets are recorded at fair value on 68 Table of Contents the date of acquisition and amortized over their estimated useful lives.
Acquired intangible assets consist of identifiable intangible assets, including developed technology, customer relationships, and trade name resulting from our acquisition. Acquired intangible assets are recorded at fair value on the date of acquisition and amortized over their estimated useful lives.
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 U.S. GAAP, and may be different 62 Table of Contents from similarly-titled non-GAAP measures used by other companies.
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 U.S. 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 that are required by U.S.
Year Ended January 31, 2024 2023 2022 (in thousands) Net loss attributable to PagerDuty, Inc. common stockholders $ (81,757) $ (128,423) $ (107,455) Add (Less): Stock-based compensation 127,152 109,907 70,033 Amortization of debt issuance costs 2,078 1,839 1,805 Employer taxes related to employee stock transactions 3,498 3,096 3,017 Amortization of acquired intangibles assets 11,510 10,237 3,500 Acquisition-related expenses 1,800 4,559 2,108 Restructuring costs 8,677 5,035 — Adjustment attributable to redeemable non-controlling interest 6,568 — — Gain on partial extinguishment of convertible senior notes (3,699) — — Income tax effects and adjustments (3,273) (2,556) — Non-GAAP net income (loss) attributable to PagerDuty, Inc. $ 72,554 $ 3,694 $ (26,992) ______________ Free Cash Flow We define free cash flow as net cash (used in) provided by operating activities, less cash used for purchases of property and equipment and capitalization of internal-use software costs.
The following table presents the calculation of non-GAAP net income attributable to PagerDuty, Inc. common stockholders for the periods indicated (in thousands): Year ended January 31, 2025 2024 2023 Net loss attributable to PagerDuty, Inc. common stockholders $ (54,460) $ (81,757) $ (128,423) Add: Stock-based compensation 126,210 127,152 109,907 Employer taxes related to employee stock transactions 2,796 3,498 3,096 Amortization of debt issuance costs 2,629 2,078 1,839 Amortization of acquired intangible assets 11,750 11,510 10,237 Acquisition-related expenses 977 1,800 4,559 Restructuring costs 742 8,677 5,035 Gain on extinguishment of convertible senior notes — (3,699) — Adjustment attributable to redeemable non-controlling interest 11,725 6,568 — Income tax effects and adjustments (21,989) (3,273) (2,556) Non-GAAP net income attributable to PagerDuty, Inc. common stockholders $ 80,380 $ 72,554 $ 3,694 61 Table of Contents Free cash flow We define free cash flow as net cash provided by operating activities, less cash used for purchases of property and equipment and capitalization of software costs.
We believe that our existing cash and cash equivalents, investments and cash provided by sales of our subscriptions will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.
We believe that our existing cash and cash equivalents, investments, and net cash generated from our operating activities will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.
As of January 31, 2024 2023 2022 Customers 15,039 15,244 14,865 Customers greater than $100,000 in ARR 804 752 594 Dollar-based Net Retention Rate We use dollar-based net retention rate to evaluate the long-term value of our customer relationships, since this metric reflects our ability to retain and expand the ARR from our existing customers.
The total number of paid customers and the number of customers with greater than $100.0 thousand in ARR were as follows as of the dates indicated: January 31, 2025 2024 2023 Customers 15,114 15,039 15,244 Customers greater than $100.0 thousand in ARR 849 804 752 Dollar-based Net Retention Rate We use dollar-based net retention rate to evaluate the long-term value of our customer relationships, since this metric reflects our ability to retain and expand the ARR from our existing paid customers.
We maintain a full valuation allowance on our net federal and state deferred tax assets as we have concluded that it is more likely than not that the deferred tax assets will not be realized for all years presented.
We maintain a full valuation allowance on our net federal and state deferred tax assets as we have concluded that it is more likely than not that the deferred tax assets will not be realized for all years presented. The provision may fluctuate to the extent the mix of earnings fluctuates between jurisdictions with different tax rates.
The increase was partially offset by a decrease in the amortization of debt issuance costs and interest for the 2025 Notes that were partially extinguished in October 2023 and therefore outstanding for most of the comparative years.
The increase was partially offset by a decrease in the amortization of debt issuance costs and interest for the 2025 Notes that were partially extinguished in October 2023 and therefore had less of an impact on the current period.
Further, we will continue to invest in enhancing awareness of our brand, creating additional use cases, and developing more products, features, and functionality, which we believe are important factors to achieve widespread adoption of our platform.
We believe that our land and expand business model allows us to efficiently increase revenue from our existing customer base. Further, we will continue to invest in enhancing awareness of our brand, creating additional use cases, and developing more products, features, and functionality, which we believe are important factors to achieve widespread adoption of our platform.
Interest Expense Interest expense consists primarily of contractual interest expense and amortization of debt issuance costs on our 1.25% Convertible Senior Notes due 2025 that were outstanding from the beginning of the year and partially 57 Table of Contents extinguished in October 2023.
Interest expense : Interest expense consists primarily of contractual interest expense and amortization of debt issuance costs on our 1.25% Convertible senior notes due 2025 (the “2025 Notes”) that were partially extinguished in October 2023 and the contractual interest expense and amortization of debt issuance costs on our 1.50% Convertible Senior Notes due 2028 (the “2028 Notes”) that were issued in October 2023.
As of January 31, 2024, we had more than 15,000 paying customers globally, ranging from the most disruptive startups to established Fortune 100 companies across every industry including software and technology, telecommunications, retail, travel and hospitality, media and entertainment, and financial services.
Our platform provides the technology to solve the customer problems underlying these and many other business initiatives. As of January 31, 2025, we had 15,114 paying customers globally, ranging from the most disruptive startups to established Fortune 100 companies across every industry including software and technology, financial services, telecommunications, retail, travel and hospitality, and media and entertainment.
Other (Expense) Income, Net Other (expense) income, net primarily consists of foreign currency transaction gains and losses. Benefit from (Provision for) Income Taxes Benefit from (provision for) income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business.
(Provision for) benefit from income taxes : (Provision for) benefit from income taxes consists primarily of income taxes in certain foreign and U.S. jurisdictions in which we conduct business.
Interest expense in the year ended January 31, 2024 includes contractual interest and amortization of debt issuance costs for the 2028 Notes that were issued in October 2023.
Interest expense increased primarily due to contractual interest and amortization of debt issuance costs for the 2028 Notes that were issued in October 2023.
Year Ended January 31, 2024 2023 2022 (dollars in thousands) Gross profit $ 352,867 $ 300,359 $ 233,035 Add: Stock-based compensation 7,586 6,827 3,751 Employer taxes related to employee stock transactions 199 163 131 Amortization of acquired intangible assets 8,614 7,401 1,120 Restructuring costs 137 357 — Non-GAAP gross profit $ 369,403 $ 315,107 $ 238,037 Gross margin 82 % 81 % 83 % Non-GAAP gross margin 86 % 85 % 85 % Non-GAAP Operating Income (Loss) and Non-GAAP Operating Margin We define non-GAAP operating income (loss) as loss from operations excluding stock-based compensation expense, employer taxes related to employee stock transactions, amortization of acquired intangible assets, restructuring costs, and acquisition-related expenses, which include transaction costs, acquisition-related retention payments, and asset impairment, which are not necessarily reflective of operational performance during a given period.
The following table presents the calculation of non-GAAP gross profit and non-GAAP gross margin for the periods indicated (in thousands): Year ended January 31, 2025 2024 2023 Gross profit $ 387,834 $ 352,867 $ 300,359 Add: Stock-based compensation 5,984 7,586 6,827 Employer taxes related to employee stock transactions 162 199 163 Amortization of acquired intangible assets 9,075 8,614 7,401 Restructuring costs (2) 137 357 Non-GAAP gross profit $ 403,053 $ 369,403 $ 315,107 Revenue $ 467,499 $ 430,699 $ 370,793 Gross margin 83.0 % 81.9 % 81.0 % Non-GAAP gross margin 86.2 % 85.8 % 85.0 % Non-GAAP operating income and non-GAAP operating margin We define non-GAAP operating income as loss from operations excluding stock-based compensation expense, employer taxes related to employee stock transactions, acquisition-related expenses, amortization of acquired intangible assets, and restructuring costs, which are not necessarily reflective of operational performance during a given period.
Often, our customers expand the deployment of our platform across large teams and more broadly within the enterprise as they realize the benefits of our platform. We believe that our land and expand business model allows us to efficiently increase revenue from our existing customer base.
Expanding Within our Customer Base The majority of our revenue is generated from our existing customer base. Often, our customers expand the deployment of our platform across large teams and more broadly within the enterprise as they realize the benefits of our platform.
Therefore, a substantial source of our cash is from our deferred revenue, which is included in the liabilities section of our consolidated balance sheet. Deferred revenue consists of the unearned portion of customer billings, which is recognized as revenue in accordance with our revenue recognition policy.
Deferred revenue consists of the unearned portion of customer billings, which is recognized as revenue in accordance with our revenue recognition policy.
Using incident management, process automation, AI operations, and customer service operations, 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.
Using incident management, automation, AI operations, and customer service operations, our platform for digital operations 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. In addition, our generative AI capabilities allow organizations to manage mission-critical tasks smarter and faster.
For additional information on the potential impact of macroeconomic conditions on our business, see Part I, Item 1A, “Risk Factors.” 54 Table of Contents Key Factors Affecting Our Performance Attracting New Customers Sustaining our growth requires continued adoption of our platform by new customers. We will continue to invest in building brand awareness as we further penetrate our addressable markets.
Key Factors Affecting Our Performance Attracting New Customers Sustaining our growth requires continued adoption of our platform by new customers. We will continue to invest in building brand awareness as we further penetrate our addressable markets.
We have spent more than a decade building deep product integrations to our platform, and our ecosystem now includes over 700 direct integrations to enable our customers to gather and correlate digital signals from virtually any software-enabled system or device.
We have spent more than a decade building deep product integrations to our platform, and our ecosystem now includes over 700 direct integrations to enable our customers to gather and correlate digital signals from their technology stack. This allows technical teams to collect digital signals from nearly any system or platform in their environment without the effects of context switching.
Operating expenses also include amortization of acquired intangible assets, acquisition-related expenses, allocated overhead costs for facilities, shared IT related expenses, including depreciation expense, and certain company-wide events and functions. Research and development Research and development expenses consist primarily of personnel costs for our engineering, product, and design teams.
Personnel expenses are the most significant component of operating expenses and consist of salaries, benefits, bonuses, stock-based compensation expense, and sales commissions. Operating expenses also include amortization of acquired intangible assets, acquisition-related expenses, allocated overhead costs for facilities, shared IT related expenses, including depreciation expense, and certain company-wide events and functions.
A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP. Non-GAAP Gross Profit and Non-GAAP Gross Margin We define non-GAAP gross profit as gross profit excluding stock-based compensation expense, employer taxes related to employee stock transactions, amortization of acquired intangible assets, and restructuring costs.
Non-GAAP gross profit and non-GAAP gross margin We define non-GAAP gross profit as gross profit excluding the following expenses typically included in cost of revenue: stock-based compensation expense, employer taxes related to employee stock transactions, amortization of acquired intangible assets, and restructuring costs. We define non-GAAP gross margin as non-GAAP gross profit as a percentage of revenue.
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. 64 Table of Contents Year Ended January 31, 2024 2023 2022 (in thousands) Net cash provided by (used in) operating activities $ 71,974 $ 16,980 $ (6,021) Less: Purchases of property and equipment (2,164) (4,637) (3,457) Capitalization of internal-use software costs (5,384) (3,836) (3,353) Free cash flow $ 64,426 $ 8,507 $ (12,831) Net cash (used in) provided by investing activities $ (30,525) $ (86,165) $ 17,376 Net cash provided by (used in) financing activities $ 51,600 $ (6,413) $ (736) Liquidity and Capital Resources As of January 31, 2024, our principal sources of liquidity were cash and cash equivalents and investments totaling $571.2 million.
The following table presents the calculation of free cash flow for the periods indicated (in thousands): Year ended January 31, 2025 2024 2023 Net cash provided by operating activities $ 117,891 $ 71,974 $ 16,980 Purchases of property and equipment (2,791) (2,164) (4,637) Capitalization of software costs (6,686) (5,384) (3,836) Free cash flow $ 108,414 $ 64,426 $ 8,507 Net cash used in investing activities $ (19,968) $ (30,525) $ (86,165) Net cash (used in) provided by financing activities $ (116,138) $ 51,600 $ (6,413) Liquidity and Capital Resources Sources and Uses of Liquidity As of January 31, 2025, our principal sources of liquidity were cash and cash equivalents and investments totaling $570.8 million.
The PagerDuty Operations Cloud combines AIOps, Automation, Incident Management, and Customer Service Operations into a flexible, resilient, and scalable platform to increase innovation velocity, protect revenue, reduce cost, and mitigate the risk of operational failure. 52 Table of Contents Today, nearly every business is a digital business.
The PagerDuty Operations Cloud combines artificial intelligence (“AI”) operations (“AIOps”), automation, customer service operations, and incident management with a generative AI assistant to create a flexible, resilient, and scalable platform to protect revenue and improve customer experience, accelerate innovation, improve operational efficiency, and mitigate risk of operational failures. Today, nearly every business is a digital business.
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 infrastructures and operations, security, customer service, and executive stakeholder roles across the organization.
In this environment, the ability to anticipate, orchestrate, and resolve time-sensitive, critical and unplanned work before it escalates is a critical requirement for success. 51 Table of Contents 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 the silos of development, information technology (“IT”) infrastructure and operations, security, customer service, and business operations and reaches executive stakeholder roles across an organization.
Our financial performance will depend in large part on the overall demand for our platform, particularly demand from mid-market and enterprise customers, and our ability to meet the evolving needs of our customers.
Our financial performance will depend in large part on the overall demand for our platform, particularly demand from enterprise customers, and our ability to meet the evolving needs of our customers. As of January 31, 2025, we had 15,114 paying customers spanning organizations of a broad range of sizes and industries, compared to 15,039 as of January 31, 2024.
General and administrative General and administrative expenses consist primarily of personnel costs and outside services fees for finance, legal, human resources, information technology, and other administrative functions. In addition, general and administrative expenses include non-personnel costs, such as legal, accounting, and other professional fees, hardware and software costs, certain tax, license and insurance-related expenses, acquisition-related expenses, and allocated overhead costs.
In addition, general and administrative expenses include non-personnel costs, such as legal, accounting, and other professional fees, hardware and software costs, certain tax, license and insurance-related expenses, acquisition-related expenses, and allocated overhead costs. We expect that our recurring general and administrative expenses will increase in dollar value as our business grows.
Critical Accounting Policies and Estimates Our consolidated financial statements and the related notes thereto included elsewhere in this Form 10-K are prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP.
Critical Accounting Estimates Our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K are prepared in accordance with U.S. GAAP. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures.
Recently Adopted Accounting Pronouncements For further information on our recently adopted accounting pronouncements, refer to Note 2, “Summary of Significant Accounting Policies” in the consolidated financial statements contained within this Form 10-K.
Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies in the notes to our consolidated financial statements included in this Annual Report on Form 10-K for a description of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted.
As of January 31, 2024, 65 Table of Contents we had deferred revenue of $228.2 million, of which $223.5 million was recorded as a current liability and expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.
As of January 31, 2025, we had deferred revenue of $245.8 million, of which $243.3 million was recorded as a current liability and expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria are met. 62 Table of Contents Share Repurchase Program In May 2024, our Board of Directors approved a share repurchase program (the “2024 Share Repurchase Program”) for the repurchase of shares of our common stock in an aggregate amount of up to $100.0 million.
Since inception, we have financed operations primarily through sales of our cloud-hosted software subscriptions, net proceeds received from sales of equity securities, and the issuance of our Notes. On June 25, 2020, we issued $287.5 million aggregate principal amount of 2025 Notes in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act.
Since inception, we have financed operations primarily through sales of our cloud-hosted software subscriptions, net proceeds received from sales of equity securities, and the issuance of our 2025 Notes and 2028 Notes (collectively, the “Notes”).
Macroeconomic Environment Our business and financial performance may be subject to the effects of the worldwide macroeconomic conditions, including, but not limited to global inflation and the rise in interest rates, existing and new laws and regulations, recession or economic downturn globally or in the jurisdictions in which we do business, health epidemics or pandemics, volatility in foreign currency exchange rates, and bank failures.
Our strong gross margins allow us the flexibility to invest more in our platform and go-to-market function while maintaining strong operating leverage on our path to profitability. 52 Table of Contents Macroeconomic Environment Our business and financial performance has and may continue to be subject to the effects of worldwide macroeconomic conditions, including, but not limited to, global inflation and heightened interest rates, existing and new laws and regulations, and economic uncertainty and volatility globally and in the jurisdictions in which we do business.
Item 7. 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 should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of the financial condition and results of operations of PagerDuty, Inc. and its wholly-owned subsidiaries, and subsidiaries in which PagerDuty, Inc. holds a controlling interest (“PagerDuty,” “we,” “us” or “our”) should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K (this “Form 10-K”).
Year Ended January 31, 2024 2023 2022 (dollars in thousands) Loss from operations $ (96,246) $ (129,377) $ (101,711) Add: Stock-based compensation 127,152 109,907 70,033 Employer taxes related to employee stock transactions 3,498 3,096 3,017 Amortization of acquired intangible assets 11,510 10,237 3,500 Acquisition-related expenses 1,800 4,559 2,108 Restructuring costs 8,677 5,035 — Non-GAAP operating income (loss) $ 56,391 $ 3,457 $ (23,053) Operating margin (22) % (35) % (36) % Non-GAAP operating margin 13 % 1 % (8) % 63 Table of Contents Non-GAAP Net Income (Loss) Attributable to PagerDuty, Inc.
We define non-GAAP operating margin as non-GAAP operating income as a percentage of revenue. 60 Table of Contents The following table presents the calculation of non-GAAP operating income and non-GAAP operating margin for the periods indicated (in thousands): Year ended January 31, 2025 2024 2023 Loss from operations $ (59,772) $ (96,246) $ (129,377) Add: Stock-based compensation 126,210 127,152 109,907 Employer taxes related to employee stock transactions 2,796 3,498 3,096 Acquisition-related expenses 977 1,800 4,559 Amortization of acquired intangible assets 11,750 11,510 10,237 Restructuring costs 742 8,677 5,035 Non-GAAP operating income $ 82,703 $ 56,391 $ 3,457 Revenue $ 467,499 $ 430,699 $ 370,793 Operating margin (12.8) % (22.3) % (34.9) % Non-GAAP operating margin 17.7 % 13.1 % 0.9 % Non-GAAP net income attributable to PagerDuty, Inc. common stockholders We define non-GAAP net income attributable to PagerDuty, Inc. common stockholders as net loss attributable to PagerDuty, Inc. common stockholders excluding stock-based compensation expense, employer taxes related to employee stock transactions, amortization of debt issuance costs, amortization of acquired intangible assets, acquisition-related expenses, restructuring costs, gain on extinguishment of convertible senior notes, adjustment attributable to redeemable non-controlling interest, and income tax adjustments, which are not necessarily reflective of operational performance during a given period.
The increase in general and administrative expense was driven by an increase of $8.4 million in real estate impairment charges and an increase of $8.0 million in personnel expenses. This was partially offset by a decrease of $3.0 million in outside services related to higher leverage of internal resources through hiring.
The increase in research and development was primarily driven by: (i) an increase of $2.8 million in personnel costs as a result of increased bonuses for research and development employees in the current year; offset by (ii) a decrease of $0.9 million in outside services spend due to higher leverage of internal resources.
Interest Income Interest income consists of accretion income and amortization expense on our available-for-sale investments and income earned on our cash and cash equivalents and interest earned on our short-term investments which consist of U.S. Treasury securities, commercial paper, corporate debt securities, and U.S. Government agency securities.
Treasury securities, commercial paper, corporate debt securities, and U.S. Government agency securities. Interest income increased primarily due to accretion on our cash, cash equivalent and investment balances in the current year.
The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by management.
We also generate revenue from term-license software subscription fees. PagerDuty has a land-and-expand business model that leads to viral adoption of our products and subsequent expansion. An increasing focus for our go-to-market motion, including our field sales team, is serving enterprise customers. Our mid-market and enterprise customers account for the majority of our revenue today.
Those same integrations connect with popular collaboration tools and business applications within modern and legacy technology stacks to drive automation of work. We generate revenue primarily from cloud-hosted software subscription fees. We also generate revenue from term-license software subscription fees. PagerDuty has a land-and-expand business model that leads to viral adoption and expansion of our products.
The increase in sales and marketing expense was primarily due to an increase of $3.3 million in marketing, advertising and promotion costs related to third party trade shows, events and media campaigns, and an increase of $0.3 million in hosting and software costs. This was partially offset by a decrease of $2.5 million in personnel expenses.
The increase in sales and marketing was primarily due: (i) an increase of $3.0 million in outside consulting services; (ii) an increase of $2.5 million in marketing costs for media campaigns in the current year; (iii) an increase of $1.5 million in training and travel-related costs; and (iv) an increase of $1.4 million in personnel costs, primarily related to an increase in stock-based compensation, commissions, and bonuses; offset by (v) a decrease of $1.8 million in costs to support the business and related infrastructure, which include allocated overhead costs.
This has allowed us to achieve gross margin of over 81% for the fiscal year ended January 31, 2024. Our strong gross margins allow us the flexibility to invest more in our platform and go-to market function while maintaining strong operating leverage on our path to profitability.
This has allowed us to achieve gross margin of 83.0% for the fiscal year ended January 31, 2025.
These teams drive expansion to additional users, new use cases, and add-on products, as well as upsell to higher value plans. The PagerDuty field organization is focused on selling the PagerDuty platform across IT, DevOps, and customer service operations teams.
The PagerDuty sales and customer success teams drive expansion to additional users, new use cases, and additional products, as well as upgrades to higher-value plans. Our enterprise customers account for the majority of our revenue today. The PagerDuty platform is central to customer initiatives targeted at incident management transformation, operations center modernization, automation standardization, and customer experience operations.
Our customers in regions impacted by conflict represented an immaterial portion of our net assets and total consolidated revenue both as of and for the fiscal year ended January 31, 2024. We will continue to monitor the direct and indirect impacts of these or similar circumstances on our business and financial results.
We will continue to monitor the direct and indirect impacts of these or similar circumstances on our business and financial results. For additional information on the potential impact of macroeconomic conditions on our business, see Part I, Item 1A, Risk Factors.
Cash Flows The following table shows a summary of our cash flows for the periods presented : Year Ended January 31, 2024 2023 2022 (in thousands) Net cash provided by (used in) operating activities $ 71,974 $ 16,980 $ (6,021) Net cash (used in) provided by investing activities $ (30,525) $ (86,165) $ 17,376 Net cash provided by (used in) financing activities $ 51,600 $ (6,413) $ (736) Operating Activities Our largest source of operating cash is cash collection from sales of our cloud-hosted and term-license software subscriptions to our customers.
Cash Flow Information The following table shows a summary of our cash flows for the periods indicated (in thousands): Year ended January 31, 2025 2024 Net cash provided by operating activities $ 117,891 $ 71,974 Net cash used in investing activities (19,968) (30,525) Net cash (used in) provided by financing activities (116,138) 51,600 Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash (124) (401) Net change in cash, cash equivalents, and restricted cash $ (18,339) $ 92,648 Operating Activities Net cash provided by operating activities improved, primarily due to improvements in our operating loss performance due to the 9% increase in revenue.
Growth from existing customers was attributable to increases in the number of users and upsell of additional products and services. 60 Table of Contents Cost of Revenue and Gross Margin Year Ended January 31, 2024 2023 Change % Change (dollars in thousands) Cost of revenue $ 77,832 $ 70,434 $ 7,398 11 % Gross margin 82 % 81 % Cost of revenue increased by $7.4 million, or 11%, primarily due to an increase of $1.8 million in amortization of internally developed software, an increase of $1.7 million in higher hosting, software, and telecom costs, an increase of $1.5 million in personnel expenses as a result of increased headcount and salaries, an increase of $1.2 million in amortization of acquired intangible assets related to acquisitions, and an increase of $1.0 million in other expenses, primarily related to outside services.
The following sets forth our cost of revenue and gross margin for the periods indicated (in thousands, except percentages): Year ended January 31, Change 2025 2024 $ % Cost of revenue $ 79,665 $ 77,832 $ 1,833 2 % Gross margin 83.0 % 81.9 % Cost of revenue increased primarily due to: (i) an increase of $2.0 million for amortization of capitalized software; (ii) an increase of $1.2 million in outside services spend for the customer service team; (iii) an increase of $1.1 million in hosting, software, and telecom costs; and (iv) an increase of $0.5 million in amortization of acquired intangible assets; offset by (v) a decrease of $2.2 million in personnel costs primarily as a result of changes in the components of compensation plans and a decrease in stock-based compensation compared to the prior year; and (vi) a decrease of $1.0 million in costs to support the business and related infrastructure, which include allocated overhead costs. 56 Table of Contents Operating Expenses Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+1 added−0 removed4 unchanged
Biggest changeAs of January 31, 2024, we had $57.5 million and $402.5 million aggregate principal outstanding of 2025 Notes and 2028 Notes, respectively. The 2025 Notes and 2028 Notes have a fixed annual interest rate of 1.25% 1.5%, respectively; accordingly, we do not have economic interest rate exposure on the Notes.
Biggest changeThe 2025 Notes and 2028 Notes have a fixed annual interest rate of 1.25% 1.50%, respectively; accordingly, we do not have economic interest rate exposure on the Notes. However, the fair market value of the Notes is exposed to interest rate risk.
We do not enter into investments for trading or speculative purposes. Our investments classified as available-for-sale investments, including those with stated maturities beyond twelve months, are classified as short-term based on their highly liquid nature and because they represent the investment of cash that is available for current operations.
We do not enter into investments for trading or speculative purposes. Our investments classified as available-for-sale investments, including those with stated maturities beyond 12 months, are classified as short-term based on their highly liquid nature and because they represent the investment of cash that is available for current operations.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk As of January 31, 2024, we had cash, cash equivalents and investments totaling $571.2 million, invested in money market funds, U.S. Treasury securities, commercial paper, and corporate debt securities. Our cash and cash equivalents are held for working capital purposes. Our investments are made for capital preservation purposes.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk As of January 31, 2025, we had cash, cash equivalents and investments totaling $570.8 million, invested in money market funds, U.S. Treasury securities, commercial paper, and corporate debt securities. Our cash and cash equivalents are held for working capital purposes. Our investments are made for capital preservation purposes.
However, the fair market value of the Notes is exposed to interest rate risk. Generally, the fair market value of the fixed interest rate of the Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair market value of the Notes fluctuates when the market price of our common stock fluctuates.
Generally, the fair market value of the fixed interest rate of the Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair market value of the Notes fluctuates when the market price of our common stock fluctuates.
As of January 31, 2024, a hypothetical 10% relative change in interest rates would not have a material impact on our consolidated financial statements. Foreign Currency Exchange Risk 69 Table of Contents Our reporting currency and the functional currency of our wholly-owned foreign subsidiaries is the U.S. dollar.
Changes in interest rates impact the fair value of marketable debt securities. As of January 31, 2025, a hypothetical 10% relative change in interest rates would not have a material impact on our consolidated financial statements. Foreign Currency Exchange Risk Our reporting currency and the functional currency of our wholly-owned foreign subsidiaries is the U.S. dollar.
The fair market value was determined based on the quoted bid price of the Notes in an over-the-counter market on the last trading day of the reporting period. Refer to Note 5, “Fair Value Measurements” to our consolidated financial statements for more information. Changes in interest rates impact the fair value of marketable debt securities.
The fair market value was determined based on the quoted mid price of the Notes in an over-the-counter market on the last trading day of the reporting period. Refer to Note 5. Fair Value Measurements in the notes to our consolidated financial statements included elsewhere in this Form 10-K for more information.
In addition, we may sell these investments at any time for use in its current operations or for other purposes, even prior to maturity. As of January 31, 2024, our available-for-sale investments are recorded as current on our consolidated balance sheets.
In addition, we may sell these investments at any time for use in its current operations or for other purposes, even prior to maturity.
Added
As of January 31, 2025, our available-for-sale investments are recorded as current on our consolidated balance sheets. 65 Table of Contents As of January 31, 2025, we had $57.5 million and $402.5 million aggregate principal outstanding of 2025 Notes and 2028 Notes, respectively.

Other PD 10-K year-over-year comparisons