The application observability firm PagerDuty Inc. gave shareholders plenty of reasons to be happy today after posting second-quarter financial results that beat expectations and following up with a strong forecast for the next three months.

The company reported a loss before certain costs such as stock compensation of four cents per share, better than its own forecast of an eight- to nine-cent loss. That was based on revenue of $90.3 million, up 33% from the same period one year ago and above its own guidance of $87 million to $89 million. Wall Street had been looking for an eight-cent loss per share on sales of $88 million.

Under generally accepted accounting principles, PagerDuty reported a 44-cent loss, resulting in an overall net loss of $38.6 million.

Despite losing money, PagerDuty’s encouraging growth is a welcome respite for investors who have endured a steady stream of disappointing financial results from enterprise software firms. The likes of MongoDB Inc., Salesforce Inc. and Splunk Inc. have all reported results that point to a slowdown in information technology spending.

PagerDuty is a leader in the application observability market. It sells a cloud monitoring platform that enterprises use to notify their developers and engineers of technical issues with their apps and the infrastructure that supports them. Not only that, PagerDuty also provides tools to help those users quickly troubleshoot any problems that occur, allowing customers to avoid too much application downtime.

PagerDuty Chairperson and Chief Executive Jennifer Tejada (pictured) said the company’s results were driven by strong demand across all regions and verticals. She said that’s because its software provides an “immediate and high” return on investment for customers seeking to boost productivity and efficiency.

“As essential infrastructure for modern enterprises, trusted by developers and leadership alike to orchestrate and drive digital acceleration, cloud adoption and DevOps transformation, we are especially well-positioned in an uncertain macro environment,” Tejada added. “We remain confident in our ability to continue to execute well as we progress toward profitability.”

Investors seem to have regained their confidence in the company too. Following the report, PagerDuty’s stock jumped more than 8%, erasing a 7% loss it suffered earlier in the day.

The company said it now counts 15,174 paying customers, up 7% from a year earlier. Of those customers, 689 contribute at least $100,000 in annual recurring revenue, the company said.

“If investors are seeking a recession-proof category of enterprise software, PagerDuty may just have shown that the observability space fits the bill,” said Holger Mueller of Constellation Research Inc. “Evidently, enterprises need to run their next-generation applications and observe and manage them, regardless of economic conditions. That explains why PagerDuty has managed to deliver on very good growth and keep up its guidance for the rest of the year.”

For the third quarter, PagerDuty said it expects revenue in a range of $92 million to $94 million, with a loss of three to four cents per share. Wall Street is targeting $92.6 million in revenue and a bigger loss of six cents per share.

The company also raised its full-year forecast. For fiscal 2023, it now expects total revenue of between $365 million and $370 million, up ever so slightly from its previous range of $364 million to $369 million.

Photo: SiliconANGLE