PagerDuty Faces Investor Investigation After Q3 Earnings Miss

Written by Emily J. Thompson, Senior Investment Analyst

PD-2.32%

Source: Businesswire

Updated: Dec 04 2025

0mins

Source: Businesswire

Declining Financial Performance: PagerDuty's Q3 fiscal 2026 report, released on November 25, 2025, revealed a drop in the dollar-based net retention rate to 100% from 107% a year earlier, indicating negative impacts from customer churn and budget caution on revenue.
Lowered Revenue Outlook: The company revised its full-year revenue guidance to between $490 million and $492 million, down from the previous range of $493 million to $497 million, reflecting a mere 5% year-over-year growth and signaling weakened market confidence in its growth prospects.
Significant Stock Price Drop: Following the disappointing earnings report, PagerDuty's stock plummeted by $3.54, or 23.3%, closing at $11.64 per share on November 26, 2025, resulting in substantial losses for investors.
Customer Churn Trends: Although the number of customers churning and downgrading is trending downwards, the dollar value of contraction driven by seat reductions and customer budget caution has exceeded forecasts, highlighting challenges in customer retention for the company.

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PD

$10.51+Infinity%1D

Analyst Views on PD

Wall Street analysts forecast PD stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for PD is 16.14 USD with a low forecast of 12.00 USD and a high forecast of 20.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.

9 Analyst Rating

4 Buy

4 Hold

1 Sell

Moderate Buy

Current: 10.760

Low

12.00

Averages

16.14

High

20.00

Current: 10.760

Low

12.00

Averages

16.14

High

20.00

Truist

Buy

downgrade

$20 -> $16

2026-01-07

Reason

Truist

Price Target

$20 -> $16

AI Analysis

2026-01-07

downgrade

Buy

Reason

Truist lowered the firm's price target on PagerDuty to $16 from $20 and keeps a Buy rating on the shares. Over the past year, a clear split has emerged between AI winners and losers, with seat-based business models down an average of 34% while other companies gained 24%, the analyst tells investors in a research note. This bifurcated sentiment is expected to continue driving a valuation gap in 2026, though some of last year's underperformers may rebound, the firm says.

RBC Capital

Outperform -> Sector Perform

downgrade

$17 -> $15

2026-01-05

Reason

RBC Capital

Price Target

$17 -> $15

2026-01-05

downgrade

Outperform -> Sector Perform

Reason

RBC Capital downgraded PagerDuty to Sector Perform from Outperform with a price target of $15, down from $17. The firm believes the company's seat-based pressures are likely to persist. The incident management market will continue to consolidate and there is limited margin upside for PagerDuty in the short-term, the analyst tells investors in a research note.

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About PD

PagerDuty, Inc. is engaged in digital operations management platform that manages urgent and mission-critical work for digital business. The Company collects data and digital signals from virtually any software-enabled system or device and leverages enables machine learning to correlate, process, and predict opportunities and issues. It uses incident response, event management, and automation, the Company brings together the right people with the right information so they can resolve issues and act on opportunities in minutes or seconds from wherever they are. The PagerDuty Operations Cloud consists of PagerDuty Incident Management, AIOps, Process Automation, and Customer Service Operations. PagerDuty Incident Management provides a real-time view across the status of a digital service while incorporating intelligent noise reduction to remove false positives. PagerDuty Process Automation provides a centralized design time and run time environment for orchestrating automated workflows.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.