FRSH - PagerDuty: Deceleration In Customer Growth Is Alarming

2024-01-31 13:00:49 ET

Summary

• PagerDuty's performance has lagged behind its peers and the market indices, leading to a downgrade to a SELL rating.
• The deceleration in PagerDuty's customer segment is alarming, indicating a loss of appeal for its products.
• The company's attempts to target large enterprises and cut costs have not shown significant improvement, raising concerns about its future prospects.

Investment Thesis

So far, PagerDuty ( PD ) has been languishing in the shadows of the outperformance demonstrated by some of its peers as well as the benchmark market indices. The most notable difference in PagerDuty’s 1-year performance is seen in mid-2023, when most technology companies benefited from increased enterprise spending ( here , here ). This performance can be seen below....

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