PagerDuty: A Clear 'Sell' As Churn Issue Worsens (Downgrade)

Gary Alexander33.51K FollowersFollow5ShareSavePlay(8min)CommentsSummaryPagerDuty has showcased consistent weakening in churn rates, with dollar-based net retention dropping to 98% (or 2% net churn) in Q4.With worsening top-line metrics and no clear path to recovery, I'm dropping my rating on PagerDuty to a “Sell”.Though the stock is cheap at <1x forward revenue, the “SaaSpocalypse” has opened up many higher-quality buying opportunities in the software sector. Michael Vi/iStock Editorial via Getty Images As 2026 wears on, the enterprise software sector continues to face tremendous headwinds that we haven't seen in years, with fears of the “SaaSpocalypse” wiping out years of gains and crunching valuation multiples down to bargain-basement valuations. My overarching view on this trend is thatThis article was written byGary Alexander33.51K FollowersFollowWith combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.