Observability company PagerDuty Inc. did everything right today, reporting fourth-quarter earnings and revenue that topped expectations plus a strong outlook for the next three months, sending its stock higher in after-hours trading.

PagerDuty’s stock had already gained more than 8% in the regular trading session, before gaining more than 14% after the report.

The company reported an operating loss of $27.2 million, amounting to a loss before certain costs such as stock compensation of 4 cents per share. Revenue for the period rose 32% from a year ago, to $78.51 million. Wall Street had PagerDuty down for a bigger loss of 6 cents per share on revenue of $76 million.

PagerDuty also reported fiscal 2022 revenue rose 32% from the year before, to $281.4 million, up 32%.

PagerDuty is in the so-called observability business, selling a cloud monitoring platform that’s used to notify developers and engineers of any technical issues with their applications and the infrastructure they run on. The company also sells tools used to troubleshoot any issues that are found as quickly as possible, helping its customers avoid any downtime.

PagerDuty founder and Chief Executive Jennifer Tejada (pictured) said the company’s growth was thanks to ongoing market traction for its new products and its strong go-to-market execution.

“We delivered revenue of $79 million for the quarter and $281 million for the year, both growing 32% year over year, and gained operating leverage which positions us well for durable growth,” she said. “Our digital operations platform is designed to effectively predict, facilitate and automate the urgent, unstructured work essential to modern business success.”

The company shared a few more positive metrics, such as a dollar-based net retention rate of 124% at the end of the quarter, up from 121% a year ago. NRR is a metric that indicates how much revenue growth or churn a company has from its existing customers. Investors like to see a number over 100% here because it shows that a company’s existing customer base is spending more.

That’s not to say PagerDuty is failing to get new customers — quite the opposite, in fact. It ended the quarter with more than 594 customers that generate at least $100,000 in annual recurring revenue each year, up from 426 a year ago. Moreover, its number of customers who produce over $1 million in ARR rose to 43, up from 26 a year ago. And PagerDuty’s total paying customer count rose to 14,865, up from 13,837 last year.

Constellation Research Inc. analyst Andy Thurai told SiliconANGLE that PagerDuty’s revenue growth of around 30% was in line with most other vendors doing CloudOps, AIOps and observability. “With everyone moving to cloud, things like cloud-native monitoring, observability and cloud operations become major issues,” Thurai said, explaining the growth. “Forced digital operations maturity gives enterprises no option but to get a solution like PagerDuty to keep the lights on.”

Looking ahead, Thurai warned that PagerDuty faces a lot of competition in the space, with many even smaller players popping up with rival solutions. “Faster and focused execution in the next twelve months is key for PagerDuty,” he added.

Nevertheless, PagerDuty seems confident it will be able to deliver that growth going forward. For the current quarter, it sees revenue of between $81.5 million and $83.5 million, ahead of Wall Street’s estimate of $80.2 million in sales.

PagerDuty’s full-year forecast calls for $360 million to $366 million in sales, comfortably ahead of the $352.6 million consensus estimate.

Thurai’s colleague Holger Mueller the company’s performance was strong overall, though he was surprised by the higher loss for fiscal 2022, which grew by about 40 cents per share from the previous year. “The good news is that the team around Jennifer Tejada has a plan for the next fiscal year to cut losses back to a more manageable 17 to 23 cents per share for the full year,” he said.

Photo: SiliconANGLE