PD - Earnings call transcript Q3 2020

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Operator

Good afternoon. My name is Ian, and I'll be your conference operator today. At this time, I would like to welcome everyone to the PagerDuty Third Quarter 2020 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. you. Thank Instructions] [Operator

turn over now Please Stacey go ahead. the will to conference Finerman. I

Stacey Finerman

thank joining Wilson, financial you conference and Executive Jennifer afternoon, Good for and Chairperson Chief discuss on call Chief fiscal Financial Tejada, me PagerDuty's call and us PagerDuty's third Company's With quarter Howard results. Officer; today's are the to today's on Officer.

on statements. call forward-looking include this Statements made

materially may different known and those achievements unknown cause that our involve uncertainties or statements. actual statements implied Forward-looking to or and be from expressed forward-looking by performance results, risks the

only represent of made, statements our obligation statements. Forward-looking management's undertake beliefs we date are to and assumptions statements these forward-looking as such update no the and

in today's discuss a These these In not number financial non-GAAP financial GAAP. to addition, substitute the equivalents. for will versus we related or closest a are of call, with of of in during accordance to limitations GAAP prepared addition to their financial superior There performance and measures non-GAAP are measures measures. non-GAAP measures financial use

as reconciliation companies to non-GAAP in may measures differently for measures may our measures or calculate usefulness which earnings financial financial our A and is reduce non-GAAP other of non-GAAP measures other release. all comparison. the their use could between performance, evaluate GAAP example, of available tools financial For

to XX-Q Commission SEC. time included recent quarterly results information most we Further from with affect Factors previously could including make and on and filed the these titled and in Risk filings are Exchange company's the that company's financial the other Form the the factors with section Securities time,

Jennifer? to over the Now I'd to turn our CEO, like Jennifer Tejada. call

Jennifer Tejada

like strong for earnings was this for call. the joining Stacey, I'd grew to to you, you, a and revenue third share three quarter in Thank quarter. as year-over-year highlights million. afternoon XX% our $XX QX us thank quarter everyone,

over as XX,XXX and the customers, has remained We quarter up we steady remains First, ended remarkably growth quarters. strong scale. the year-over-year XX% customer growth past consistently seven with over

We or sustained in growth quarter. base customer the our metrics robust revenue growth. an two growth growth year-over-year, enterprise on durability recurring customers the with above revenue and growing ARR the saw XX% increasing show mid-market sustained annual rate demonstrates a delivered These to also $XXX,XXX we in second that our have that similar

Next, in some We're we enterprise. now large in terrific to our contract deals have world of largest the quarter each leadership Fortune two investment the five both close wins with of continuing in and in defense strategic These contractors three value of ARR. new partnering -- almost billion $X solidify after wins, position XXX largest a banks companies the two these combined sectors. in of [ph] the

not cloud The go-to-market requirements enterprise apart. huge to and consequential and regulated born multiyear verticals architecture in in investments multinational, us highly do in business the are set models tech our

us show record our proven companies and especially our progress security track features, value Both our enterprise learning scale ease-of-use, our platform, resilience our referenceable machine of and based and realization. for automation in

increase in expansion Our customer us. XX% year over ARR that a resulting through laser customers in a base continue to focus in on in win go-to-market teams spend success, thousand business $XXX an our with

This quarter Europe. in partnership significant Company software with headquartered we a large won global a expansion

in enhance to the support their the place have expanded to services. growth business and our and U.S. in trust with now users operations their customers upgraded started relationship subsidiary package The European software they and digital the global the and

digital by our advancing customers operations their reducing demand We continue transformation incidence and measurable as to realize see value efforts. growing through digital for offering

package. the of the digital was net and management to This early where underscored the in expansive ARR attributed addressable market this quarter operations we operations the see digital new XX%

business other impact to benchmark metrics digital This AIOps Response, operations solution against which leverages learning intelligence and which event and improving analytics real-time our automate machine Incident and Modern to in which quantifies our management teams. bundle on platform, our includes provides work, our product, workflows recommendations visibility

That our to within our revenue of see revenue group. highly proud an we as and growth We're net said, stabilize rate they dollar net rate dollar opportunity retention. peer our retention rank

we As we to half sales mentioned hires our year in capacity. in QX increase front-loaded the of first the sales

expansion our However, this we pressure with could didn't expansion sales in fast impacted effectively put revenue. as have ramp and as territories on those which salespeople as we significant and productivity upside

by less Not a well an our last the than at XX% at is customer remained we're also This that any margins we that churn ARR issue XX%, customer given of that evidenced far and X% our rate remain year in retention competition execution on. by constant gross six for quarters. above working issue, has meaning, validated best-in-class

few the early last implemented the delivering we more sales initiatives following that months, improvements encouraging in effectively Over but are people. ramping

to doubled tools and we sales First, on new leadership, down ramp programs enablement faster. reps

increasingly Second, customers. and more noisy market all discovery PagerDuty investment and including messaging making an for we on to return the clearly new continued and self-service platform and efforts our our of articulating of in for easier differentiate simplify products our

that sales with enterprise I'm sales of Chief infrastructure, security Revenue first appointment senior a commercial have Finally, leader global our sales David experience high-caliber Officer, share our Salesforce and service. and significant the customer to we strengthened with and in excited very depths from Justice, Cisco and in leadership in team

an early CMO digital growth, in marketing. to him compliment high-velocity and us who excellent expertise January to Herendeen and Julie join be in I BXB partner expect and has will our Dave

billion response our you least operations. excited $XXX management, all the million incredibly teams are the of part a for extend digital when managing our of lead total operations and we to remain market consider in We a across digital where opportunity that alone at a market incident see company about $XX addressable

a every what explain technology and PagerDuty results be position. me needing why Let to and ops mean by a company. customer we Always-on An patients World in digital company is unique in

their apps constantly to to on more As provide our iterating to a experience. result, move customer customers services the the their best continue of cloud

with work mission-critical, parallel transition emergent, and In structured has changed from planned shifting to work. work and unstructured with this market spontaneous mix modern

a PagerDuty units minutes. business and that orchestrate issues to geographies across into only and leverages partner multiple action is machine dilutive seconds converting teams insightful the data in complex learning on

operations revenue. and $XXX,XXX where costly the the of ecosystem these increasingly critical through as cutting complex requires the can that to high disruptions nervous noise. acting simultaneously This central in manage stakes orchestrating cost the are $XXX,XXX minute system, workflows a Digital and rest a are to and above of all long-term sits partner technology a

work as well grade enterprise the in at enterprises, PagerDuty position unique we've cloud architected and security is scale. been with large the for for to because innovative startups, complex as resilience

management see customers agile transformation, their with digital to increasingly our operations programs additional digital start products we frequently customers their to and our on-call outcomes. support accelerate business transformation adopting While management

business another XXXX with you it, XXXX platform a you seats to started the build initially company support it users. culture. own to led DevOps PagerDuty Gap The with add Early PagerDuty success

product major our our could cause and digital we automation to that incidents millions greater operations that saw package expanded As of with they value by reduce Gap dollars. capabilities intelligence could leveraging realize further

dollars that Gap to now more IT per uses streamlined and will distribution save millions of PagerDuty creating We to Gap's incidents. as upgrade directly connect approach centers digital year. operations this estimate well teams, handling product smarter, as

went it each challenges different There be and it are public complement with many year. hard in we that sometimes to digital solutions can associated recognize market address several this related great companies how discern including of transformation the We other. that the

standard like Jira in to companies all you help customers route New workflows will ServiceNow our services glass. AppDynamics, you ticketing. Some Datadog, of show the single pane give your Relic and of Cisco health customer IT and like your service a Others desk

when is intelligent time-sensitive sequential work a of But speed, all an orchestration. work mission-critical limited customer-facing there and of the inflexibility are manual detection, valuable data-driven services. ticketing analytics are unpredictable and absence These by lack

to of because all PagerDuty the customer end a work in signal is a and we go different noise way automate to the resolution in service experience. the people finding the cross-functional of beyond orchestrate through

can do different holistic data XXX ecosystem from through super the understanding because PagerDuty the system consume integration a our customers of set to we the digital all services Only over customers as technology a of build of software our central nervous this health. use

together XX humans them performed we IT recognize becoming a symptoms situation pattern to unhealthy, bring how of that of to action we automation right can right and with owners technical and how matter from the on issues services match against years and the When and only help team respond detailed service a experts resolve we AI-based subject and solutions proactively. of and small data business context

of customer Logic and longstanding PagerDuty in well. expanded this Sumo package. digital purchasing quarter use operations their third our the by quite Our They illustrates partner

it's reliable heavily by their As on relied at a their of the SaaS -- understand critical developers performance to relied applications is highly platform business scale. heavily

increasingly leveraged become disrupting preventing orchestrate to to PagerDuty incidents seconds from when matter they response storming for major They immediate use and events teams customer issues. to PagerDuty

have PagerDuty's in we stage the as the why and set position terms validating of such horizontal position, about an unique for in from I'll talk enterprise, our winning explain opportunity a the increasing Now capture how opportunity we by revenue our new you products and that sizable a platform.

XXX. an win exists XX% greenfields a and where the like our for today opportunity us. and expansion we segments quarter both another Enterprise accounts In product to for XX% Fortune the need and of up-sell other this Fortune XXX adding enterprise we First, of companies new opportunity two cross-sell. serve after these user significant is growing

depth, product this record uncontested have highly largely are XXxX resilience window. track serve are and to operations We're of competitors had the resilient and lack native a segment. maintenance as deals Our cloud scale architected for largely our never

continue afford We the platform customers us is awareness implement year-in many one their World digital support visibility requirements the year-out. change and our can't one customers because that and moments they production a reasons trust critical in and mission-critical is our of where the of even to partner as operations. of Always-on lack to This

execution see into our small precisely self-service is enterprise. mid-market In in significant strength This addition and businesses, where upside sales we to in play. comes medium-sized and and

our the per needs product Our and the senior and midmarket value builds strategic businesses needs differs and motion users direct-to-developer critical. but from security sales quickly and leadership compliance and sales addressing is of teams alike meeting realizing field-based developer administration motion. teams economic large enterprise customers enterprise our frictionless with With requirements engaging on, technical of while buyers

a annual by that customers and payback study revenue a risk these PagerDuty ITC averaged XXX% recent meets mitigation, Our needs as years. illustrated our four-month ROI and in savings shows solution $X.X three over period million visits enterprise

Dave Revenue strengthen Officer, operations significantly and with of digital, more senior customer in operational the Chief As we optimizing manage their XXXX global expense as and have sales a will reducing appointment leadership our experience of we Justice the process. revenue

our from increasing operational measuring which and and for AIOps new team Intelligent, for visibility upon Incident analytics and data and are build revenue Modern learnings all awareness, we Event products. Next, health Response, platform. of solution, our from our productivity, situational

quarter; such is announced this also Intelligent for new Triage. engine our analytics issues that data of to its recommendation two can practices. repeat improving and product We as Intelligent use new future XX-years capabilities improvements Dashboards Dashboards Intelligent teams spotlight alerts, escalation through actionable fixing leverages on stopping and and

reduce teams with their context risk so can and Triage time additional significantly the of outage and impact. issues within and how their mitigating It how benchmarks also know an and into new cutting Intelligence issue of compared detection teams the see time provides between to resolution their work peers is built-in provide prioritize in Intelligent the managers business to industry. organization Event across

efficiently from our reacting greater and they arise. problems return. customers use of their mature proactively to before operations digital and deliver digital more mature products businesses these products When managing incidence their operations preventing help they to All

we before XX% As the as products recently in bundles. quarter here signals also digital was booked of to ability the to with I great upsell to we've the net some our ARR seen new these operations mentioned attributed regards

to our a apply Last challenges of by but continue increasingly well validate What and to we and DevOps we position beyond solutions horizontal is not teams horizontal platform. that IT. least customers the mean purview as our

the operations In on security customer in launched quarter and the partnership PagerDuty for in for February. we Zendesk. service launch third follows PagerDuty This with Salesforce

customer the front service effort. those is management on is of us ensuring that opportunity experience impacting a significant customer lines issues a and teams rapidly resolving as for Customer are cross-functional

another Being U.S. municipality. new companies with horizontal being a to work. in partnership Top platform time-sensitive That corner also mean we with critical XX means initiated that to mind city applicable customer the all brings

a and like services Think and be customer both Historically, the about essential by would of into is physical a water, little notified gas visibility must-have. causes. city underlying the virtual always issues where on with power,

redesigned the minutes to as Service so digital this and triage outages our address outage would take were issue. they after quickly of even start issues costly a the teams can it before upwards and help they to proactively. PagerDuty, XX services operations Using city of power coordinate team, expert with

Response can are reducing with and automatically Response to Modern Incident revenue plays from run the Incident -- Modern response impacted. to customers issues resolution PagerDuty PagerDuty impact. time Significantly And detection before mitigating resolve city the

from One additional over the the where in pipeline we was our XX% Conference a with increase This our the best XXXX in Francisco value millions. from quarter and San built Annual attendees, highlight yet previous Summit significant Industry is summit year. sales biggest

supportive Customers excited innovations and in with and customer investments were the through Salesforce deeper we our about service new announced and integration Zendesk.

a the out to and partners customers, employees, want entire we wish uneventful calendar year, period. happy community As holiday PagerDuty of at we close shareholders our users, safe, and

the of that help emergent holidays need. continue be we We're holidays will the difficult in employee keenly those the for to can also customer our financial aware reduce work. impact customers Over and

honor for those our Medic time-sensitive Mobile, delivery needs donating PagerDuty.org in VillageReach our partners. each supporting of we're by to healthcare customers of two in $XX,XXX So the and of

I'd the CFO that, Howard turn With Wilson. -- our call Howard to Howard CEO our Wilson. like to over

Howard Wilson

Jennifer. to for Revenue the million XX% guidance. third results. high the our increased of We're $XX.X year-over-year of our pleased beating end you, third Thank fiscal XXXX quarter with quarter

product adoption in Strong acquisition, to contributed our international results. new particularly new all geographies healthy customer and strong growth EMEA,

industry-leading gross margins which remain are at non-GAAP XX%. Our strong

guidance. line in Our came Non-GAAP negative per EPS with at share $X.XX in our

a We to generating total this year-over-year our record saw continue track XX,XXX on of increased to efficiently basis We cash managing customers. in flow add again capital customers XX% positive quarter. to

customers up We were with ARR, of see a the further thousand XXX our in pleased to success enterprise to above customers. year-over-year evidence $XXX in XX%

were the bigger of to growth growth demonstrating As ability several line Jen customers larger exhibited customers mentioned in base. we've with for quarters grow both rates in total our and now a

quarter to retention amount customer the patents. revenue XXX%. new net quarter of metric the versus do a will and based This relative expansion variabilities dollar we of the business Our was for fluctuate in buying

suboptimal in mentioned reps some created we the Jen on our sales has base, pressure of downward new her on this expansion which metric. challenges the execution remarks, to with led some As ramping in faced opportunity installed has

to sales continue drive However, deals. our we're see to new tenured pleased reps significant and expansion

$XXX,XXX with two added year-over-year. to in annual in number we by spent recurring customers the XX% us example, XXX For new of the and Fortune revenue XX increase bringing customers us who over

revenue quarter our from In largest fact this quarter was for new customers. annual recurring

an international grew with region global exceptional deals quarter including a XX% our revenue in Our our based for one EMEA software was This year-over-year. largest of quarter Europe. for company the enterprise

detailed I to will These results. basis. non-GAAP results turn a now the financial are on

GAAP be results reconciliation release. between earnings in a along and with GAAP results can our Our found non-GAAP financial

in third XX% of quarter, the margin third In line with was year. last non-GAAP the quarter gross

and to customer production approach operating DevOps programmatic between success at architecture, margins. approach cloud-native business efficient drives to XX% We Our model. look and our XX% our run gross

approach on take opportunity us as the In that When to of areas advantage ahead term, more are growth us. the it focusing we expense we investing to of help look operating will in balanced growth near a comes to scale the our side business, managing of take we profitability. the and

over scale of However, long term expect the the we reap leverage. operating as to benefits we

compared Non-GAAP In quarter, $XX of the QX in were an XX% to year-over-year. million compared XXXX. representing in $XX the operating third were period, million of expenses million non-GAAP expenses quarter development million and year-ago for the $XX same third research fiscal increase to $X

operations. Innovation us, a our in and we priority to as will lead continue has been be top continue to extend real-time for

both expect QX percentage revenue. dollars of in to increase a We total R&D as in and

were XXXX $XX marketing of to compared and expenses QX $XX by million fiscal grew for Non-GAAP million. of XX% QX sales and

our we discussed plan we and call QX our Industry Conference spend sales for attendance earnings incremental for a we for discretionary on Annual record As where set new generation. pipeline

percentage decrease advertising productivity. our for sales expect a back above-the-line and rate to in we campaign, QX close for as And and scale QX to sales decline and to a we as continue brand team to to our revenue run improved of marketing

in were Non-GAAP and modest of general two in of latter part given the $X and in company. the for and being a public our investment XX% team previous anticipation systems more increase expenses administrative increased FY QX in quarter the year-over-year, headcount for XXXX million quarters

and expenses QX. general in expect slightly increase to administrative We

Our was million the $X year. non-GAAP of million loss operating a in to quarter same loss $X in quarter last compared the

Our non-GAAP in development. increases in go-to-market operating QX margin of the negative primarily by driven and last research same was and negative XX% year, investments XX% in in and period

we Over improvement the margin. expect in operating longer-term

Non-GAAP net to million loss share basic of $X of loss per $X the year. net third per non-GAAP or loss quarter $X.XX million last net compared in loss or quarter the $X.XX of a share of for a third a was

The quarter. in the operating drop prior third a about by in We cash as compared this generated million interest quarter rates the to negatively penny in impacted $X.X million flow $X.X EPS in year.

million Free $X.X major QX cash Working capital compared continue was a positive year. manage margin $XXX,XXX QX capital a efficiently. in was X% driver flow Free improvements last to we in year. X% compared cash flow positive as to last to here were

mentioned impact we towards As office on will related the our basis This our earnings cash long-term call short-term. On negatively capital cash work sustainable in flow. expenditures a last expecting increase to we're we free still in free build-outs. will an

$XXX million by XXXX. from year proceeds the offering million balance Turning up our public to the in driven ended quarter capital. in well initial investments, sheet; raised the equivalents working was as fiscal as of we end and cash, This the with cash primarily positive $XXX

to fiscal $XXX range million year million. see $XX.X XXXX fiscal the guidance a we'll $XXX our and onto fiscal is of in and the quarter, full the of to a XXXX, be fourth to million XXXX revenue fourth and the million of the expected quarter full $XX.X fiscal year for range Moving in for

loss net and the $X.XX expected for are full share to outstanding to be $XX Non-GAAP be range the quarter fiscal million the of of the for expected to range $X.XX full-year $X.XX fourth Basic XXXX the million and to fiscal $XX fiscal $X.XX per is shares XXXX. for in QX in and respectively. year

that, some With make Jennifer will closing comments.

Jennifer Tejada

closing Howard. most at our of Las in largest last just customers Services, I've with Reinvent. a partner and days Web spend Thanks our AWS and the innovative Amazon number Vegas three In

that Tuesday adoption cloud on-prem his in X% front with reinforced conversation trillion of are cloud the we cloud spent migration us. of $X.X reminded us journey early only in of the customer cloud the I've cases PagerDuty's Jassy importance migration with digital opportunity have Andy keynote today. we XX% of how popular most of the world's Every transformation. IT still is also been and market in the optimistic one and about being more use of never in

on durable are building value that big a generates for solve long focused a that game delivering We growth and the of through customers efficient model. business cash problems company on on innovation measurable our

into Given continue platform. innovation build to we the our

and This time PagerDuty. enterprise on growth for an quarter's our uptake digital exciting is operations management in truly

please Q&A. Operator, call your now happy the open questions. for you take We're can to up

the Our of [Operator Suri Bhavan first question line is Instructions] from from William Blair.

Bhavan Suri

had pieces of of XX color of couple net look time. there. Thanks things couple as take for some guys levels Salesforce, love sort sales on term improvement you Justice you've that I at want terms business months because congrats the of rates bode rates of should a the guys. things say out a think Obviously so get and confidence you XX here Hey do job to I Cisco returning in building And NDRR and the care years, next next had some that well, these and you your playing to so and David to the of about he as the of the sort did long the dollar to sales rate brought or you quarters understanding taking at over But maybe hire. retention driven the my execution. questions growth for touch don't had guess, I you up of nice sort on things about and growth in by great price.

will that rates? those Just some gives understanding confidence over next the you Thank and XX-XX of sort how play of out you think those you what returning in

Jennifer Tejada

start fact at Sure. in that the market I'll demand a that then is the help going and where with a through built deploy the values, credit enterprise demand foundation strong a organization are then strength because but from market from others. we're to first relates view focus strong that there product as really add problems very in beyond in can our the business market we provides position unique. perspective on that mid-market trust where to go-to-market like customer validation growing a where and our customers to them security customer start that we rapidly lower the our in direct and on call a expand management, like And areas with success. my starting leadership strength land on and of our self-service, solve it direct and we're to product strong of In motion service particularly we've opportunity, expand real see you but position ability to a companies sales IT when to extending are platform and is and DevOps market

landed one with It's about of of within those in early we've that customers excited opportunity single the the and already grow base that journey a days very sold them. not out. all We're to is

about go I'd We terrific in And sales very also very larger had still expertise, So bringing but think unique landing good our domain at a that a who comes It team me Dave the doing we quarter We're deals. mentioned significant really it is us the to of a XX%. presents like efficient I it. on also we're leader job. experience, confidence. technical leadership with way growing a strong gives still lot global at opportunity. scale a

drive our our improvement and top XX%. over You XX% at XXX,XXX over it. XXX,XXX base to growing cohort customer growing of a at look execution at up That's on a customers strong very

early stabilize that and in net rate ability exciting position very I think to market. feel but I feel build is a I continue dollar about to optimistic very what retention our our So

Bhavan Suri

you a number those Got solutions? understand to very it. strategy for And customer interest Thank case for business early you. want quick business Obviously rollout operations, and solutions of for basically Got made monetization cloud our intelligence, sorry. based I one the solutions in follow-up. it. use then response started pricing duty just compelling

Jennifer Tejada

been very in There's strong Sure. of on interest were because solutions those built demand. customer basis they the

us can Our communicating things associated that when working that start on execute their they material an has incidents customers we're commercial have technology-centric with through the of to legal the need to public on with these origin told to communicate the managing whether able the like customers, balance incident response be that's that or we with the impact the business business. risks can a so

so response, within the communication instance for the was that intelligence automate intelligence. a that's And response to designed happening business of take

the to You action. take that is responders think they people problems, thing that big automatically important the take the important right away solving but I don't ability it from And there really right in the moments. drive in is quickly give so can the action stakeholders about loop through

microseconds seconds minute. talking so And we're and about

strong that. been PagerDuty So in in security. has strong there for been interest There's very interest

where security even in In already that again weren't designed using that. demand for customers are we came us fact, though from

response times businesses. and of to integration IT who loss make the So to work threat built to reducing their improving those their really we've are teams support organization and collectively stack DevOps the trying within out sure with they're coordinated our business there and

and broader I to just other they where can add trust for more community capability organization. the that our effectively asking we're CFOs, with is, kind their that and business as IT to engage they've And success efficiency, CIOs, parts thing and that within base see a leadership other would the in tends and some impact the within of execution the platform -- I cases services we And and to on senior in we're the customer PagerDuty loved ability talking teams across conversation using users take with across developer our seeing of about organization. they what of CTOs to already of seen PagerDuty, think drive basis they're are even that improvement other want the operational start develop

Howard Wilson

might is this this. Howard. Bhavan, then I the aspect pricing And comment just of on

In is of can us. horizontal this be The platform terms that is same pricing they great products regardless applicable cases, to used cases means, that doesn't about the as the -- new case. number not use new This being used a represent these platform of any of platform applies for thing emerge. the

And the so customers integrations work this support to we is platform essentially we have of be that work they custom or -- we do case that available use the as kinds API we the build right to appropriately. able open integrations with our to to ensure using access

Jennifer Tejada

today. in And services some running. and up organizations going to users say, that don't monetize a suffice to in we the of divisions And expect those us cases in teams expansion get serve can through you or new where in new and we're business functions new

Bhavan Suri

Very you. it. Got helpful. Appreciate guys. Thanks

Jennifer Tejada

Thank you.

Howard Wilson

Bhavan. Thanks

Operator

Capital And is from Hedberg Markets. your line question from Matt RBC next of the

Matt Hedberg

like to certainly taking good it for my addition in great see a growth Thanks is guys. team. was the large deals. like looks Okay it it question. Dave the And Jen, to looks

next impressive, comment can curious really if I'm curious, on reps better. a And there enough quick for you was sales that with you've any to the other have Dave how this quickly leg growth? leadership? do Dave's cohort this reps, make needs secondarily of broader are expect do obviously obviously think than even growing I doing mix tenured revenue. to they faster guess on you the that under you I'm are reps position the of lot aren't you ramp that added, I noted capacity yourself changes newer productivity right but to really that ramping

Jennifer Tejada

to do think do we very what and do I quickly. to efficiently well and we continue need but

it not first did So the year in the enough. fast digest and quarters we front-loaded the of hiring two elephant the

of ramp. they some up said a and their speed. our are reps time with But coming that, how to took to it pleased longer progress so, really period of And having I'm

tenured more from reps we Some mentioned managers. today of came the who relatively under new working deals are

improve. I think platform us to so to for And creates that continue a

function on And I other really on new have business look think improve we realizable where and that identify we continuing the basis to of be value, with and that driving it's customers technology think on engage I business new the new like process way and ensure fast-growing on things build into our and process shift will well of things. and don't basis selling go-to-market and lean any success do and to focused quantifiable come business. the opportunities continues from to and into value. but Dave their always outcomes selling that feature the we are and But There to process,

have to and things be of we be we learn delivered can quarter bigger terrific as and we how that. you proud despite to execution And very and You I'm smarter. a issues that the at get do and have better

it from start think of the ground I gives and foundation to Dave running. really hit good

Matt Hedberg

helpful. broader wondering maybe That's moves about to And more when helpful. approach. kind of operation new can looked sales what versus into cell but point-based maybe like sales? an of or like? platform account, to And customer what this you I'm I a the cycles platform assume super this curious was up-sell a then spend on is of new cycles for the digital the these sales disclosure more talk there's happens sales a

Jennifer Tejada

Sure. varies It depends next. the think it I one to customer -- from

work trial, are or would They issue large particular be series time. several XXX that team They expanded benefits that they separate first the five alerts people we solution to than started like So Using six and see see things you to small over example Intelligence and They our resolve is users. which a cross-functional long a automation treated benefits machine of a consolidate instead in streams. allow I those retailer. a and started takes actually historically the a XXX with getting that of and users. recognize inefficient to learning particular can machine of Event one a in in like learning get process that of to involved of the can which thousand on think do alerts a with one

of example that in learning automation to the machine benefit platform. through other of saw and of they And trial led and so simple solutions them exploring that a

CIOs lot you The analytics from understand house. product, that your true of in helps where CTOs of the cost our operations a and see other interest particularly is area in we the which leaderships

of costing re-platform legacy see that facing innovation. So don't are shift $XX so abstract have application to services creating we customer what for system Unfortunately, happen to all the they million disruption. invest dollars new million customers can and their is lot you lost legacy often platforms you're into investment think new those cloud actually can for saving instance, in work may of to that and that you unplanned due use and a be drags and year-over-year revenue yourselves yourself $X there actually other

health that So help all brings of surface the you heat analytics to the map of also can your and teams.

operational that's expense may who be another tied to that people some very recognize So have real top-line understand efficient productive teams that benchmark burning one you are against some and And sooner, team and aren't. and deliverables. out why to

of source there lots interest delivered historically so, a information in having executives the to of manually. that all been has where truth, single And

more the that of the innovation ahead large being think developer shift, platform because process is a and and getting senior play I the being to market. very and and rest tend that's we technology the Matt, see the well more of our the CIOs of organization They technical. so community of in are CTOs the And leading a and buyer more other loved recognize of a involved value PagerDuty by

comes of that a there's that. confidence so with And lot

The an it our sales to either situation cycles. dramatically average sales the expansion have of in cycle plays traditional longer be doesn't necessarily within often

on more starting the We to to start like we'd seen they with where those entry have some value point. companies operations lands digital customers And opposed big with of realize see we as larger faster. because recently multinational that think

Matt Hedberg

Super lot. helpful. a Thanks

Jennifer Tejada

you. Thank

Operator

line next DA question our from from Jaluria And Davidson. is of Rishi the

Unidentified Analyst

on Hi guys. Rishi. for for my This taking is Thank you Hannah [ph] questions.

expectations for you wondering could PagerDuty months? XX have the for next first, Just was I with customer you and if what your about talk service traction

Jennifer Tejada

queue. I Thank we, have very been you in And I results. for for customer September think voice the traction. our Zendesk It's nice the and Q&A Hannah. event. released hear we've at in just had that by to very both encouraged service to would say a question good We the PagerDuty female only

that we weeks few new the first in using over been sign these those us customers the customer within past. within and hadn't think saw are customers services I XX to service their up teams

detail So be we indicator. I providing line item But think that's really won't good early on future. as separate a that in the

what it about The end kind process and then didn't themselves for car it teams their a as customer an and something our the a to resolving Having like and inextricably out trying for teams case didn't lot problems a app teams from in for to so the Identifying said being customer you developer And that, customer you us. service more momentum important looks into. is analogists value and these our customer work. the a play see IT providing My services customer and really leverage That are service. more arrived. process, customer before whatever business customers proposition the customers just it need counterparts. for be. with lot the issue of there service up, cases. how that resolution of order two, they're as in does My may origin, of solve that's have if technology-centric think development linked show app the problems learning customer One now set incident their are go that of you that deliver in didn't

Unidentified Analyst

the a two with great. you inside balance? in Okay, it have how and talk prioritize base new And you about sounds helpful. customers. like could of Wondering these then opportunities you lot both if That's

Jennifer Tejada

swipe a search. start They credit a card qualified know and us and with product through to of thing to the there reputation. land The have coming go. of marketing problems. have our always Well, the by good through land experienced don't trial for engine, trade-off They self-service a we motion one because They our vast a customers is then have already you our the other. and Yes. majority digital they set

And And are so sales that upside. focused new doesn't driving take on time with away lands will the from like occasionally a teams sales rep. engage And expansion they came more and didn't be online out They really wanted much trial. wanted They start the the through then our mentioned our that larger more with large sales and really to want pure help. handheld land. teams are defense with in an contractor process to where we particular case a I

they make talk both to see really continuing often them if our discover area just new So, by continue to we account-based try prospects works in to and to could new does want simplifying where is alike an customers enterprise think be of products landing larger product prospects the interesting. into marketing various. the much developers, focus it's time online sort for a how met And want salesperson. to with at they and it to customers we engage as our and They same both to easy and discover where people. product the we use what product, mid-market and sales and really expansion it especially opportunity But want if don't want to go. driving And don't you've that

pre-empting from in the of things And thinking delivery. they're thing around something basis And the is what going our think of We're lead our on on asking the innovation are not I and change. that's the corner for we and very breadth our continue us will depth future. think for, so would track them some the last growth what's is I of there the that need technology to hard we to our customers win record listening platform, focused and to about product on that but of the also underscore

Unidentified Analyst

Great. Thank so you guys much.

Operator

Stanley. line the from Keith question Weiss next from our of Morgan And

Keith Weiss

between terms customer in Hey again with you Jen onboard. he's It one been questions account there. have, that in to the some equation, a an two, moving one? on I kind looking issues to capabilities overall switch lot sales Two is versus are you Thank usually reduction questions for having top taking sounds from and quarter for then was, terms opportunity. the like to organization. number I have [ph] you [Indiscernible]? evening. addition new the expansion coming rate of that expansion number expansion into being a sales sitting you of forward reps looking of guys additions. sells and reps, he for of guys. equation assume -- kind kind it of the and What sort the account the of adds comes for Nice What in that to this continuing sales new sort it in are the find are then net management bring are you selling team, the the like him And what net that to of

terms guys? sales would net wondering issues have new rep with to What like I was of of kind kind I the am connection So equation wrong expansion. getting in new of up ramping that in

Jennifer Tejada

So, because I the your little difficult a gong hear. and question try repeat mean I'm to lines to was

me start your qualities Justice first organizations? capabilities there. to existing our bring what Let part for does think first table was your about additional -- or of the the Dave question I

who general bring organization So look from software best who us first planet. culture, new of And internally. can leader the a the company it the on experience fit whenever It with all help someone performing to also but will best the more just is companies leadership. find but leadership talent recruit enterprise starts starts talent, a Dave brings to experience, importantly, we the with develop we terrific leadership two not sales can our into

Chung, Steven leadership reputation also He And here. deep Dave hard on all a as Steven has largely who us to together for domain that exist very strong expertise. in, two with And But been he's worked but has segments combination come. engage those got we direct the has in of of sales in. go-to-market that I mentioned for the that time, organization some global when complements quite the didn't scaling both focused been things frankly are also unique developing organization within experience

Dave he's or who within businesses. other companies he's parts of been a us comes companies And those organization But leaders important number built the smaller our of at some within run of to have the scale. companies. with large significant been smaller and

are the of to and go-to-market number new of leading companies organization acquired of both they go-to-market one we a security Cisco most out it that for think organization there. we parts the for It He a as businesses. terrific the more footprint is really recently largest build of led software he So Salesforce started admire.

the one So brings that's that inclusive taken the that's scale. I'm which build centers but also lead spent to experience waiting machine about leading excited it's and around around importantly, oriented in lot the fit of ourselves, here. and very want asked I of unstoppable a to And think see leadership. our be around has he to SaaS culture is modern for very to we sort the future in build in got not that his opportunity and He's just championship designed time customer

he's that think strong I very a an very be So going I'm addition already to team great proud. to

I really hard think was your second to understand. question

I think dollar what driving I break retention. you that can the you what's heard some net down was right? on So pressure say of Is

Keith Weiss

background. that Yes. I'm about sorry

with rep to sold expansion to account already like existing then connection. associate sales want I the just understand an accounts. So the has normally net continues see an he and

on guys like customer why new kind up So net you sales versus of like well? to ramping be it did where understand expansion looks would guys additions I really new impact like trying was

Jennifer Tejada

you organization, would say So It's I those down territories and is what sales our dividing a go-to-market and changing still organization not slimming hundreds It's grow you're is as organization, them of capacity. scale direct And people. an as sales pretty territories add you -- emerging. more

that have rep in a management maybe in So territory you been often has run a who the past. new into rep has another promoted

and new are up very rep So essentially on buyers in accounts that the the set with the product technical. a our coming to services speed is green of market new and and

engaged deeply have So they technically to well. as also be

very effectively. And I reps quickly. and enablement think historically very we've more to systematize ramped efficiently But we've as process our more reps had just have added that

on on reps those to is help some put been up pressure and that's faster. provide as expansion dollar speed where we to retention net of just having management executing the to oversight so bring And as the not could it there. We're opportunity quickly

our levels tenured one existing have three reps same existing productivity here at high in reps, who and years, years the the we saw year, been they're past. Our two still performing

just good pressure that about the left to improve dollar them And the net needed large the really retention flow-through thing is mentioned on those last last So, ability there. our just the we some has that some competitors I get process platform. of We around mentioned it. that then to we that feel of quarter

Keith Weiss

That's super it. guys. helpful. you, Got Thank

Jennifer Tejada

you. Thank

Operator

[Operator of next question from is Instructions] Our Baird. the line from Oliver Rob

Rob Oliver

guys sort contractor most that's scale you aerospace the quick a large taking of more into was before process. Great. of your aerospace unique larger as really deals and thought the there you large guys last mentioned then the think probably I sale? you and there, to customer are One for for initial and bit independent little being assuming does know vendors for still get in sort follow-up could with the question. resonate we're to the my we Jennifer on of clearly Thank a better drill down an also I'm land. of the you, when defense curious I sales had Howard. quarter banks uncontested. And well that a you the other are and defense that and what to contractor not third-party Jennifer I'm it is case. mentioned neutral not call the where And

and deals So the little more I those a motion? would bit get on love to color sales

Jennifer Tejada

Sure.

about thanks of of I couple things. this a talking for So process. the the like actually question part One, because

from Intelligence they And machine gets learning, coming being actionable the that absolutely we've insightful fact right -- our neutral our the integrations any people. the only take those into customers through third-party one correlated right catchment that custom that out-of-the-box but singles you're keys. that Event customers not then the plus then like orchestrated will environment software-enabled appreciate using of and across they to in integrations our you're that built, XXX are events we kind fact So work consolidated we that API build our using are exactly turn

reinforce we that and is So important believe our customers neutrality that. very

into case. presumption actually enterprise it's of competitive. the is first your that opposite the question around actually The though part as more larger The you move

isn't platform environment that by with user up there's of there, thousands of proven else the move highly at we liked is another enterprise because there in nobody has does users As regulated we scale and that into tens do what community. larger

something in much the And learn relationships our we there. really to of that contractor customer great a competition defense been our knowledge to the doesn't supposed more time period about mentioned some helping other new work. working one, of go and the first opportunity through case tremendously with broad see cases way contractor the and use how them work problem. to product, for and Like has example it much a so, taken successful cost it's of do don't tenured what's it's the particular has one and selling you but when you that this size the it the of been to reps see, does In more applied of account

And these situation could These be life technology be death just not machine situation. automation and system. can IT and

a important through also very there leans particular really that. high-stakes Reliability I this trust in value very, of, And think proposition, process. very the salesperson and we're but is So game. proud that becomes into hard who

genuinely and relationship that often their with don't they're a one that on frictionless helping and thought in that environment. people help think and get the Steven mindset our be built most proud customers sales partners, effective can a hands and in get to our up partners to of They're long-term that team long-term I have and XXX% successful. you their running think partner customers lend and about and things are that culture leaders sales is the our to-date I want them of I'm these

try need I I relationship, think in way. you very it a we efficient that management account Did but kind whole the and do question? of answer and

Rob Oliver

just You really for great. And a Jennifer, color. did. appreciate the you. quick That's follow-up, Howard you. Thank then

kind call trend the of more it software that bit of deal up a Was it deal? can guys I exciting as sounds a did more that it you talk EMEA in healthy to out particularly was And with know that? pretty like company. than You quarter. or you a signed as large And a little broad-based

Howard Wilson

been one interesting. we our our process those in terms already because deployed subsidiaries. set started and software subsidiary fairly is broadly Their actually offerings bit a company the a standard of of with being process was longer Incident their a us offering That's of were had And full Event regular on more Modern ended including within they little of and hadn't were This Yes. using global they taken which evaluation. rigorous Response the than components. up Intelligent the where

management And capability is so and of in this deal evaluating they proactive very of business. their the the it going team thorough with be ability get intensive what in more to out terms were to both

that a our operations but across plan view customer broad of And to. being that we example was still outset, an large set a fairly the of strategically to deploy with than at able users digital population who that with a very a get so, for find to could

Rob Oliver

Thank helpful. much. very Great. Very you both

Operator

to conference the now for there Ms. closing final back over no this [Operator at are turn And Finerman I Instructions] will remarks. questions time.

Stacey Finerman

Great. call. And today. with night, thank you and for taking calls great I you happy have thank of the lot everyone for our for holidays. other know and busy a your time many And

Operator

conclude does Ladies call. gentlemen, this our and

You may now disconnect.

PagerDuty (PD) 5 Dec 192020 Q3 Earnings call transcript