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PagerDuty: Usage-Based Pricing, AI Ops Expansion & the Shift Redefining Its Growth Model!

PagerDuty’s financial results for the third quarter of fiscal year 2026 reveal a mixed performance, spotlighting a combination of positive developments and ongoing challenges. The company recorded a revenue of $125 million, marking a year-over-year growth of 5%. This shows a continued demand for PagerDuty’s platform, although it indicates a slower growth compared to previous quarters. One of the highlights was achieving a non-GAAP operating margin of 29%, which exceeded expectations and demonstrated significant improvement, expanding by 750 basis points over the previous year. This underscores the company’s focus on operational efficiency and cost management. However, the overall annual recurring revenue (ARR) increased by only 3% year-over-year, to $497 million, pointing towards slower growth. New and expansion bookings were stable, but this was largely offset by customers rightsizing seat licenses amid budget caution. This issue has particularly impacted larger enterprises, demonstrating a challenging environment for significant expansion within existing accounts.