The observability firm PagerDuty Inc. put in another solid quarterly performance as it delivered its first earnings call of fiscal 2023 today, sending its stock higher in after-hours trading.

The company reported a first-quarter net loss of $32.8 million, higher than the $22.6 million net loss it posted in the same period one year ago. That resulted in a loss before certain costs such as stock compensation of four cents per share on revenue that soared 34%, to $85.4 million.

It was the fourth successive quarter in which PagerDuty has seen its revenue growth grow by 30% or more. The results easily beat expectations, with Wall Street looking for a wider loss of eight cents per share on revenue of $82.7 million.

Investors nodded their appreciation as PagerDuty’s stock rose more than 3% in extended trading, having already posted an 8% gain earlier in the day, an up day for most tech stocks.

The company is a leading player in the so-called application observability market, selling a cloud monitoring platform that’s used to notify developers and engineers of any technical issues with their apps 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 Chairperson and Chief Executive Jennifer Tejada (pictured) said the company benefited from a “sustained demand environment” as companies “strive for efficiency and productivity.”

“Our teams’ dedication to empowering customer success led to continued customer loyalty and expansion while our innovation drives enterprise and mid-market strength,” Tejada added. “We remain committed to profitability in Q4 FY23 and for the full year FY24. We are confident in our ability to execute and are raising our full-year top- and bottom-line guidance.”

PagerDuty’s goal to become profitable by the end of fiscal 2024 was reaffirmed by Chief Financial Officer Howard Wilson in an interview with MarketWatch. He told the publication that the company had signed “landed and expanded deals” with big name customers such as DocuSign Inc., Cisco Systems Inc., Mattel Inc. and Shopify Inc. during the quarter.

The profitability goal is an ambitious target considering PagerDuty reported a loss that was wider than one year ago, but the company can take encouragement from an array of positive growth metrics. For instance, its total paid customer count was 15,040 at the end of the first quarter, up from 13,918 one year ago. Of those customers, 655 are said to deliver at least $100,000 in annual recurring revenue, up from just 458 one year earlier.

In addition, PagerDuty reported a dollar-based net retention rate of 126%, up from 121% before. NRR is important because it’s a measure of how much revenue the company can squeeze out of its existing customer base. A score of 100% or more means it is adding revenue from that base.

Holger Mueller of Constellation Research Inc. said PagerDuty is growing fast because enterprises are desperate to digitize their operations quickly, and that’s what the company does. It remains to be seen if it can meet its profitability targets, though, Mueller said. He noted that the company’s costs grew even faster than its revenues did in the previous quarter.

“That’s not a positive development given the economic headwinds that are ahead,” Mueller said. “PagerDuty is aiming to break even by the end of the fourth quarter, but with a cost base of roughly $100 million, it will need to maintain its rapid growth momentum to do that. How well it can do so in a challenging economy remains to be seen. Investors will certainly be scrutinizing PagerDuty’s second-quarter numbers very closely.”

Looking to the second quarter, PagerDuty is forecasting revenue of between $87 million and $89 million, which would represent growth of 29% to 31%, potentially extending its hot streak. The company is also guiding for a loss of eight to nine cents per share.

Wall Street is modeling sales of $87.2 million and an eight-cent-per-share loss.

Photo: SiliconANGLE