PagerDuty

Software - Application · Technology

Price

$10.30

-0.35 (-3.29%)

Market Cap

$939.5M

Winston Score

Winston is serious

Mixed quality — meaningful strengths and weaknesses.

Share count rising — dilution

+10.0% over 4y

The company has issued more shares over this period, which dilutes each existing shareholder’s stake.

Diluted shares outstanding: 84.5M (2022) → 93.0M (2026)

PagerDuty makes software that alerts the right people when something goes wrong with a company's technology systems. If a website crashes or an app stops working at 2 a.m., PagerDuty figures out who needs to know and wakes them up fast. Its customers are mostly IT and engineering teams at mid-size and large companies across industries like finance, retail, and healthcare.

The company earns money through subscriptions, where businesses pay a recurring fee based on how many users they have. PagerDuty operates mainly in North America but also serves customers in Europe and Asia, and it generates around $470 million in annual revenue. Its moat comes from being deeply embedded in how engineering teams respond to outages, making it sticky and hard to rip out once installed. The main risk is competition from larger software platforms like ServiceNow and Microsoft, which are building similar alerting features directly into tools companies already use.

Winston Score History

Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+2.7% YoY

YoY Growth Rate

Slow revenue growth

EPS Growth

+208.3% YoY

YoY Growth Rate

Strong earnings growth

R&D Spend

$127M/ year

↓ Declining (-10% vs prior year)

25.8% of revenue

1.7x the sector average (15%)

R&D spend declining — could signal cost-cutting or efficiency

Insider Activity

14.5%ownership

→ Flat

Insiders holding steady — not selling despite ability to

Cash Position

Cash flow positive

$237M cash & investments

Quarterly Free Cash Flow

↑ Burn rate improving

Company generates more cash than it spends — no dilution risk from fundraising

Growth context

PagerDuty is growing revenue at 3% year-over-year. The Winston Score measures business quality today — these growth metrics show what could matter tomorrow.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

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Quality

Gross Margin

85.9%

Premium pricing power — 85.9% gross margin

Operating Margin

3.6%

Thin — 3.6% operating margin

ROCE

0.7%

Weak — 0.7% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY

+6.1%

Slow sales growth (6.1% YoY)

EPS YoY

N/A

—

Data not available

EPS Consistency

6/8 quarters

Earnings grew in most of the last 8 quarters

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Cash Flow

Cash Conversion

68%

Modest — 68% of profit becomes cash

FCF Margin

22.3%

Converts sales into free cash efficiently (22.3%)

Free cash flow margin above 20%. Out of every $100 in sales, more than $20 is real cash they keep.

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Stability

Debt / Equity

1.58

Elevated debt (1.58)

Interest Cover

0.50x

Dangerous — barely covers interest (0.5x)

Interest coverage below 1. Their profits don't cover the interest bill.

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Valuation

P/E Ratio (TTM)

5.6x

Attractive valuation — P/E 5.6

P/E under 10. The price tag is small relative to last year's profit.

P/E vs Forward

-1.5

SLOWING

Earnings expected to fall — forward P/E higher than today

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Dividends

Not applicable for this business.

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