Shares in PagerDuty Inc. rose nearly 7% in late trading today after the application observability platform provider delivered better-than-expected third-quarter earnings results.

For the quarter that ended Oct. 31, PagerDuty reported adjusted earnings per share of 20 cents, up from a loss of four cents per share in the same quarter of last year, on revenue of $108.7 million, up 15% year-over-year. Both were beats, as analysts surveyed by FactSet had expected earnings per share of 14 cents on revenue of $107.7 million.

PageDuty’s better-than-expected figures were driven by customer growth, with the company having over 27,000 free and paid customers as of the end of October, up 18% year-over-year. Total paid customers were 15,049, annual recurring revenue was up 13%, to $438.9 million, and customers with annual recurring revenue of more than $100,000 grew 10%, to 778.

Operating cash flow in the quarter came in at $16.9 million and PagerDuty had $575.3 million in cash, cash equivalents and current investments as of the end of the quarter.

Recent business highlights include PageDuty’s introduction of artificial intelligence-generated process automation to its Operations Cloud platform in August, allowing users to automate routine responses and remediation tasks through natural language instructions. The technology allows users to create and refine their automated processes, called runbooks, using simple descriptions, which the AI then translates into functional procedures.

PagerDuty also launched Insights Reports, which gives more detailed visibility and control over operational data. The feature is said to help teams better understand platform activities, including service impacts and incident response levels. The service also includes a Recommendations Report for noise compression and an early access User Onboarding Report.

In November, PageDuty announced that it had completed its acquisition of incident management startup Jeli Inc. The acquisition is being used to improve the enterprise resilience of the PagerDuty Operations Cloud.

“Results in the third quarter were above our guidance ranges with 15% revenue growth and a non-GAAP operating margin of 14%,” Jennifer Tejada, chairperson and chief executive of PagerDuty, said in the company’s earnings release. “Momentum and innovation within the PagerDuty Operations Cloud continued in the quarter with new AI enhancements and the acquisition of Jeli in November to address our customers’ biggest operational challenges.”

For its fiscal 2024 fourth quarter, PagerDuty expects adjusted earnings per share of 14 to 15 cents on revenue of $109.5 million to $111.5 million, roughly in line with analysts’ expectation of $110.9 million and 14 cents. For its full fiscal year, the company expects adjusted earnings per share of 72 to 73 cents on revenue of $426 million to $430 million.

Image: PagerDuty