PagerDuty (PD) delivered a decent Q2 and announced an about 15% workforce reduction to focus on growth, customer retention, and profitability, RBC Capital Markets said in a note Thursday.

The brokerage said the company's quarterly financial results were in line with expectations and exceeded profitability projections, while the reduction in headcount is aimed at shifting resources toward higher-growth product and go-to-market opportunities in a bid to improve customer retention and help reach its long-term operating margin target of about 30%.

Analysts said they were encouraged by continued momentum in the Operations Cloud, as the company has strengthened its sales team, is seeing strong customer expansion, and is experiencing better sales cycles.

The company also raised its full-year 2027 guidance across the board, reflecting stronger business momentum, analysts said, adding that they remain neutral and want to see more consistent execution.

RBC Capital Markets kept its sector perform rating and $12 price target on PagerDuty.

Shares of PagerDuty were up 11.6% in Friday trading.

Price: 14.09, Change: +1.46, Percent Change: +11.58