Breakeven On The Horizon For PagerDuty, Inc. (NYSE:PD)
PagerDuty, Inc. (NYSE:PD) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. PagerDuty, Inc. operates a digital operations management platform in the United States, Japan, and internationally. The US$2.1b market-cap company posted a loss in its most recent financial year of US$107m and a latest trailing-twelve-month loss of US$133m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which PagerDuty will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for PagerDuty
PagerDuty is bordering on breakeven, according to the 10 American Software analysts. They expect the company to post a final loss in 2024, before turning a profit of US$42m in 2025. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 63% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for PagerDuty given that this is a high-level summary, however, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with PagerDuty is its debt-to-equity ratio of 117%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on PagerDuty, so if you are interested in understanding the company at a deeper level, take a look at PagerDuty's company page on Simply Wall St. We've also put together a list of relevant aspects you should further research:
Valuation: What is PagerDuty worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether PagerDuty is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on PagerDuty’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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