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The Software Nobody Brags About Might Be Setting Up A Quiet Comeback
Noah Zelvis
January 17, 2026
Some software never gets demoed on stage. It does not drive headlines. Nobody posts screenshots of it on LinkedIn.
It just sits there in the background, waiting for something to go wrong. When it does, that software becomes the most important thing in the building.
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What Just Happened
PagerDuty Inc (NYSE: PD) reported a quarter that looked fine on the surface and uncomfortable underneath.
Revenue grew about 5% year over year, landing around $124.5M. Earnings beat expectations. Guidance, however, did not.
The company’s forward outlook pointed to revenue growth barely above 1% year over year in the next quarter.
That was enough to send the stock down roughly 25% in a single session.
Analysts followed with downgrades, price target cuts, and a familiar narrative: growth is slowing, budgets are tight, and this is no longer an exciting SaaS story.
That reaction explains why the stock is down nearly 35% over the past year and now trades close to its 52-week lows, with a market cap around $1.1B.
It also explains why sentiment feels washed out.
The more interesting question is whether the market is pricing in permanent decay, or just a rough transition phase.
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The Business
PagerDuty sells software that helps companies respond when things break. Servers go down. Apps misbehave. Systems overload. Something fails at 2 a.m. on a Sunday.
When that happens, PagerDuty routes alerts, escalates issues to the right teams, tracks resolution, and creates a record of what went wrong and how it was fixed.
It is not glamorous. It is essential.
Once a company relies on it, ripping it out is risky. Downtime is expensive. Missed alerts are worse.
That creates high switching costs, even if the product itself does not scream innovation.
The company sits at the intersection of IT operations, DevOps, and incident response. As software systems get more complex, the need for reliable coordination does not go away.
If anything, it increases.
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Why The Market Is Nervous
The bear case is not complicated.
First, growth has slowed meaningfully. Mid-single-digit revenue growth is not what investors want from a SaaS name that once traded at premium multiples.
Second, customers are cautious. IT budgets are under pressure. Seat expansion is harder. Deals take longer. Small and mid-sized businesses in particular have pulled back.
Third, the stock no longer benefits from narrative momentum. AI optimism lifted many tech names in 2024 and early 2025. This one did not catch that wave in the same way.
Put together, the market sees a tool that is still useful, but no longer exciting. That usually leads to multiple compression, not patience.
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What The Stock Is Saying Now
At around $12 per share, the valuation has reset hard. The stock trades at a low single-digit multiple on earnings, with profitability now part of the story instead of a distant goal.
This is not priced like a growth darling. It is priced like a business the market does not fully trust to reaccelerate.
That creates a very specific setup. If growth keeps sliding, the stock probably stays stuck. If growth merely stabilizes while margins improve, expectations may already be too low.
This is not about perfection. It is about avoiding further disappointment.
The Quiet Positives Getting Ignored
Profitability Is Real Now
The company posted solid earnings, beating estimates. Cost controls have worked. This is no longer a cash-burn experiment hoping scale will fix everything later.
Mission-Critical Still Means Sticky
When companies cut software spend, they trim nice-to-haves first. Tools that manage outages and incidents tend to survive. Nobody wants to save money by missing an alert during a system failure.
Usage-Based Products Are Growing Faster
While headline revenue growth has slowed, newer usage-based offerings are growing much faster than the core seat-based model. That creates optionality if customer activity picks up again.
Enterprise Exposure Is A Tailwind Over Time
Larger organizations move slowly, but they also churn less. If enterprise customers deepen usage across internal teams, growth can come back without aggressive new logo wins.
Why This Is Not A Free Lunch
This is not a no-brainer value play.
Revenue growth really has slowed. That matters. If usage expansion does not offset seat pressure, the business risks becoming a steady but stagnant utility.
Competition exists. Observability platforms, cloud providers, and integrated DevOps suites all want more of the same workflow territory.
There is also execution risk. Usage-based pricing sounds great until customers manage usage more aggressively to control costs.
The stock can stay cheap longer than investors expect if growth does not show clear signs of bottoming.
What Needs To Go Right
For this to work, a few things need to happen over the next few quarters. Revenue growth needs to stabilize. Not reaccelerate dramatically, just stop sliding.
Usage-based products need to continue growing meaningfully faster than the core. Margins need to stay disciplined. Investors will not tolerate growth slowing and costs rising at the same time.
Management needs to communicate clearly, with fewer buzzwords and more concrete operating signals.
If those boxes get checked, the multiple does not need to snap back to old highs for returns to look attractive.
How I’d Think About Position Size
This is not a momentum trade. It is a patience trade.
A small starter position can make sense if you believe the market has overshot to the downside and the business remains structurally important.
Adding only makes sense after proof. That means stable revenue trends and continued profitability, not just hopeful commentary.
This is not the kind of stock you load up on and forget. It is one you size modestly and watch closely.
The Bigger Picture
Every tech cycle produces its own winners and losers. Some companies ride hype and fade. Others survive quietly by being useful when nobody is watching.
PagerDuty sits in the second category. It does not promise a revolution. It promises fewer disasters.
Right now, the market is focused on what it is not doing fast enough. At some point, it may refocus on what it still does reliably.
That shift does not require a growth miracle. It just requires reality to come in slightly better than the fear that is currently priced in.
Bottom Line
This is a stock that got hit for slowing growth, even as it proved it can operate profitably in a tougher environment.
That does not make it a guaranteed winner. It does make it interesting.
If revenue stabilizes, margins hold, and usage-based products keep expanding, today’s pessimism may look excessive in hindsight.
This is not a story stock. It is a resilience stock. And those tend to matter more than people think, especially when things start breaking again.
Action Recap
✅ Starter: Small position if you believe the selloff priced in too much bad news
✅ Add On Proof: Stable revenue trends plus continued profitability
⚠️ Step Back: If growth keeps slowing or margins slip while competition intensifies
👀 Watch Closely: Usage-based growth, enterprise expansion, and cost discipline
That's our coverage for today; thanks for reading! Reply to this email with feedback or any tech stocks you want me to check out.
Best Regards,
—Noah Zelvis
Tech Stock Insider