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With the business potentially at an important milestone, we thought we'd take a closer look at PagerDuty, Inc.'s (NYSE:PD) future prospects. PagerDuty, Inc. operates a platform for real-time operations in the United States and internationally. The US$4.0b market-cap company posted a loss in its most recent financial year of US$50m and a latest trailing-twelve-month loss of US$57m 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.
PagerDuty is bordering on breakeven, according to the 10 American Software analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$20m in 2024. The company is therefore projected to breakeven around 3 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 55% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving PagerDuty's growth isn’t the focus of this broad overview, though, keep in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. PagerDuty currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in PagerDuty's case is 57%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
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 examine:
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.
This article by Simply Wall St is general in nature. 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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