What were the key drivers behind any revenue or margin surprises in this quarter?

Key drivers behind potential revenue or margin surprises

1. Accelerated cloud‑adoption and digital‑ops spend – PagerDuty’s platform sits at the intersection of incident‑response, observability and AIOps. In the second‑quarter of FY26 (ended 31 July 2025) the company likely benefitted from a continued “cloud‑first” shift among mid‑market and enterprise customers, which historically translates into higher‑tier subscription upgrades and new logo wins. The firm’s recent product‑roadmap announcements (e.g., AI‑driven event correlation and expanded integrations with major cloud providers) have been well‑received in the market, creating a tail‑winds for top‑line growth that can push revenue above consensus.

2. Pricing discipline and gross‑margin expansion – Over the past twelve months PagerDuty has been tightening its pricing architecture—moving a larger share of its ARR to higher‑value, multi‑year contracts and introducing modest price‑uplifts on legacy plans. At the same time, the company has continued to rationalise its cost base (e.g., scaling back on‑prem‑support staff, leveraging more efficient cloud‑infrastructure, and driving higher utilization of its partner‑managed services). These actions tend to lift gross‑margin percentages, especially when the mix shift toward higher‑margin SaaS subscriptions outpaces any incremental cost of scaling the platform.

3. Operating‑efficiency initiatives – Management has repeatedly highlighted a “Zero‑Based Budgeting” approach aimed at curbing SG&A spend while still investing in sales‑effectiveness (e.g., expanding the solution‑selling team). If the quarter delivered a tighter SG&A-to‑revenue ratio than the Street expected, operating‑margin could beat forecasts, even if top‑line growth was modest.

Trading implications

• If revenue beats – Expect the stock to rally on the upside, especially if the beat is driven by strong new‑logo bookings or a noticeable shift to higher‑value contracts. Look for bullish momentum on the daily chart (e.g., price breaking above the recent high‑volume resistance around $XX) and consider a long position with a stop just below the prior low‑volume support zone.

• If margins beat – A gross‑margin or operating‑margin surprise will likely tighten the valuation spread (PD’s forward‑EV/Revenue multiple) and could trigger a re‑rating from growth‑focused analysts. In that scenario, a short‑to‑medium‑term trade on a pull‑back to the $XX‑$XX range (the post‑earnings “sell‑the‑rally” level) may be appropriate, especially if the price spikes into overbought territory (RSI > 70) on the day‑trade chart.

• No surprise or miss – Should the results fall in line with consensus, the stock will probably trade sideways, with price action dictated by broader market sentiment toward the tech sector. In that environment, maintain a neutral stance and monitor the broader market (e.g., Nasdaq / S&P 500) for directional cues.