PagerDuty, Inc.PD

PagerDuty, Inc. Fair Value Disclosure

10-KFiled Mar 12, 20263 min read
Fair Value Measurements
The Company measures its financial assets and liabilities at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value, as follows:

Level 1—Valuations based on observable inputs that reflect quoted prices for identical assets or liabilities in active markets.
Level 2—Valuations based on inputs that are directly or indirectly observable in the marketplace.
Level 3—Valuations based on unobservable inputs that are supported by little or no market activity.

The following tables present information about the Company’s financial assets that are required to be measured or disclosed at fair value using the above input categories as of the dates indicated (in thousands):

January 31, 2026
Level 1Level 2Level 3Total
Money market funds$185,205 $— $— $185,205 
U.S. Treasury securities— 60,429 — 60,429 
Commercial paper— 3,409 — 3,409 
Corporate debt securities— 143,490 — 143,490 
U.S. Government agency securities— 26,299 — 26,299 
Total$185,205 $233,627 $— $418,832 
Included in cash equivalents$186,396 
Included in investments$232,436 
As of January 31, 2025
Level 1Level 2Level 3Total
Money market funds$298,937 $— $— $298,937 
U.S. Treasury securities— 58,665 — 58,665 
Commercial paper— 7,446 — 7,446 
Corporate debt securities— 125,811 — 125,811 
U.S. Government agency securities— 32,444 — 32,444 
Total$298,937 $224,366 $— $523,303 
Included in cash equivalents$298,937 
Included in investments$224,366 

The Company’s assets that are measured by management at fair value on a recurring basis are generally classified within Level 1 or Level 2 of the fair value hierarchy.
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of January 31, 2026 and 2025, the Company’s Level 2 securities are measured at fair value and classified within Level 2 in the fair value hierarchy because the company uses quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data or alternative pricing sources and models using market observable inputs to determine fair value.

The carrying amounts of certain financial instruments, including cash held in banks, accounts receivable, and accounts payable approximate fair value due to their short-term maturities and are excluded from the fair value table above.

Convertible Senior Notes

As of January 31, 2026, the estimated fair value of our 1.50% Convertible Senior Notes due 2028 (the “2028 Notes”) was approximately $377.6 million. The fair values were determined based on the quoted price for the 2028 Notes in an inactive market on the last trading day of the reporting period and are considered as Level 2 in the fair value hierarchy.

Historical Timeline

Fiscal YearFiled
2026Mar 12, 2026Showing above
2025Mar 17, 2025

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

Income TaxesRevenueEarnings Per SharePP&EGoodwill & IntangiblesLeasesSegmentsDebtCommitmentsNew Standards