Why The PagerDuty Stock Fell 8.14% (PD)

By Amit Chowdhry ● Jan 25, 2023
  • The stock price of PagerDuty (PD) fell by 8.14% in the most recent trading session. This is why.

The stock price of PagerDuty (PD) fell by 8.14% in the most recent trading session.

Why: PagerDuty announced that as part of the company’s ongoing actions to drive efficient growth and expand operating margins, they are advancing global scaling initiatives designed to increase the company’s capacity while improving its cost structure.

These changes include reallocating certain roles and realigning teams to continue to improve operational resiliency and agility, and rationalizing the company’s real estate footprint. The immediate impact is a 7% reduction in headcount as some roles are eliminated and new roles created in high-talent, lower-cost geographies.

PagerDuty estimates that it will incur non-recurring charges in a range of $5.0 million to $7.0 million in connection with the headcount reductions, primarily consisting of severance payments, notice pay (where applicable), employee benefits contributions, and related costs. And the company expects that the majority of the restructuring charges will be incurred in the fourth quarter of fiscal 2023 and that the implementation of the headcount reductions, including cash payments, will be substantially complete by the end of the first quarter of fiscal 2024.

The potential position eliminations are subject to legal requirements that vary by jurisdiction, which may extend this process beyond the first quarter of fiscal 2024 in certain cases. And the charges that the Company expects to incur are subject to a number of assumptions, including legal requirements in various jurisdictions, and actual expenses may differ materially from the estimates disclosed above.

Concurrent with PagerDuty’s efficient growth strategy, the company is considering real estate rationalization in line with the distributed nature of the workforce and changed use of office facilities. And this will include early termination on specific leases, which will result in one time expenses in a range of $14.0 million to $16.0 million. The company expects the majority of these charges will be incurred in fiscal 2024.