Shares of PagerDuty Inc. were trading lower late today after the company said it’s cutting its full-year revenue target, even as it upped its forecast for the bottom line.

Officials expect the company to be more profitable this year, but they also warned that negotiations with customers over new deals are taking longer to play out, hurting overall sales.

The application observability firm said it’s raising its full-year forecast for adjusted earnings to a range of 67 to 72 cents per share, up from its previous outlook of 66 to 71 cents. However, its revenue forecast for the year was slashed to $463 million to $467 million, down from its previous range of $471 million to $477 million.

PagerDuty’s stock fell more than 13% on the report, having already declined just over 7% during the regular trading session on a bearish day for tech stocks and the overall market as well.

The company 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, it provides tools to help those users do quick troubleshooting of any problems that occur, allowing customers to avoid too much application downtime.

The glum outlook came in the wake of some decent second-quarter results. The company reported earnings before certain costs such as stock compensation of 21 cents per share, with revenue growing 8% from a year earlier to $115.9 million. Those numbers were better than expected, with Wall Street looking for earnings of 17 cents on lower sales of $112 million.

All told, PagerDuty posted a loss of $13 million in the quarter, nearly halving a loss of $24 million in the same period one year earlier.

PagerDuty Chairperson and Chief Executive Jennifer Tejada (pictured) hailed the company’s “solid” performance, noting that it was the eighth consecutive quarter in which it delivered adjusted profitability. “We remain confident in ARR growth acceleration as global outages reinforce that incident management has become a CEO priority,” she said.

However, analysts were more concerned about the company’s prospects going forward, and they did not like what they saw. In a conference call, PagerDuty Chief Financial Officer Howard Wilson explained that though the company is seeing progress in multiproduct deals, “those deals are taking longer” to finalize.

Wilson added that though small and medium-sized businesses are “showing some encouraging trends around stabilizing,” they remain a “headwind to growth.”

Andy Thurai, vice president and principal analyst at Constellation Research Inc., told SiliconANGLE that PagerDuty’s main problem is the intense competition it’s facing on multiple fronts within the observability and incident management industries.

“There are many stronger players competing against PagerDuty, and many of its customers are looking for platform solutions, as opposed to the point solutions it offers,” Thurai said. “While PagerDuty has shown some decent growth in prior quarters, a lot of startups are growing much faster in these areas. So the company is going to face a lot of headwinds going forward.”

PagerDuty’s forecast for the current quarter seems to confirm that theory. For the third quarter, it offered a forecast of 16 to 17 cents per share in earnings and $115.5 million to $117.5 million in revenue. Analysts had forecast earnings of 18 cents on sales of $126.2 million.

Photo: SiliconANGLE