PagerDuty Inc. reported stronger-than-expected earnings and revenue in its fiscal 2025 third quarter as the application observability platform provider saw improving leading indicators across its business.

For the quarter that ended on Oct. 31, PagerDuty reported adjusted earnings per share of 25 cents, up from 20 cents per share in the third quarter of fiscal 2024, on revenue of $118.9 million, up 9% year-over-year. Both figures were ahead of the 17 cents per share and revenue of $116.56 million expected by analysts.

PagerDuty’s strong-than-expected figures were driven by customer growth. The company saw total customers passing 30,000 in the quarter, up 11% year-over-year. Paid customers were 15,050 as of the end of the quarter and the number of customers with annual recurring revenue of $100,000 or more rose 5%, to 825.

Remaining performance obligations, which represent the total value of contract services that have yet to be delivered and recognized as revenue, was $405 million as of Oct. 31. Of the amount, PagerDuty expects to recognize revenue of $278 million, or 69%, over the next 12 months.

New and expanded customer contracts in the quarter included deals with Alphonso Inc., CFP Energy Ltd., Cloudflare Inc., Infosys Ltd., Nvidia Corp., Waste Management Inc. and Zscaler Inc.

Recent business highlights include PagerDuty adding advanced artificial intelligence capabilities to its incident response platform on Oct. 8.  The capabilities included the launch of an AI assistant for Microsoft Teams that allows administrators to access incident information and initiate remediation workflows directly within the Teams interface. This assistant also identifies recent configuration changes that may have led to application outages to help with quicker troubleshooting.

Additionally, PagerDuty enhanced its alert management features by implementing machine learning models with improved pattern recognition. The models more effectively process alerts and filter out unnecessary data and group-related notifications, in the process, accelerating incident analysis. The company also upgraded its event orchestration tool to automate the manual work involved in assessing alert urgency and preparing data for analysis.

“Consistent performance over the past four quarters has led to stabilization across all business segments and, along with improving leading indicators, positions the business on a strong upward trajectory,” Chairperson and Chief Executive Jennifer Tejada said in the company’s earnings release.

For its fiscal fourth quarter, PagerDuty expects adjusted earnings per share of 15 to 16 cents on revenue of $118.5 million to $120.5 million. For the full year, the company expects adjusted earnings of 78 to 79 cents per share on revenue of $464.5 million to $466.5 million.

Image: PagerDuty