PD - Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Tony Righetti

Good afternoon and thank you for joining us to discuss PagerDuty’s Fourth Quarter and Fiscal Full Year 2022. With me today – with me on today’s call are Jennifer Tejada, PagerDuty’s Chairperson and Chief Executive Officer and Howard Wilson, our Chief Financial Officer.

Before we begin, let me remind everyone that statements made on this call include forward-looking statements based on the environment as we currently see it, which involve known and unknown risks and uncertainties that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. These forward-looking statements include our growth prospects and future revenue, among others and represent our management’s belief and assumptions only as of the date such statements are made and we undertake no obligation to update these.

During today’s call, we will discuss non-GAAP financial measures, which are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. and measures GAAP our available between release. earnings reconciliation non-GAAP is financial in A these factors we and the on information Further other results Securities Exchange included the company’s that are in with filings make and Commission. financial affect could call turn I Jennifer. to the that, over With will

Jennifer Tejada

Thank Tony today. you for joining to you, everyone thank us and

on there. support adoption, macro impacted our people across for strong PagerDuty’s with of and year continue cloud over tough talent the we acceleration to speak operations market. platform trend to DevOps the QX digital light tailwinds, several by last the I in performance tight demand the deliver in costs consistently and board, top with revenue growth We of prior XX%. revenue our ongoing improved closing and a of in long-term I exceeded year driven leverage. want XX% the million, that persist, rising also growth operating $XXX a automation by a new and consistent challenging million, acknowledge transformation, terrific to appetite company results and full increasing was hallmarks quarters, the to growth strong year-over-year Strong and year. are those QX FY In that continued compared to $XX third QX XX% of acceleration with fantastic quarter the Before total results our results, of consecutive grew above ‘XX XX% line momentum. growing our guidance. a environment, entered the for a conflict thoughts a digital our bottom and comp result fiscal growth Ukraine great

above we net retention fifth achieved consecutive XXX%. quarter, For the dollar-based

of our growth their and to customers. are Our customers’ our our central anticipating throughout leadership PagerDuty’s strategies, needs the FY to advance digital helping ‘XX accomplishments to maturity. operations digital is our this platform teams and testament a quarter them

customer focus sustained multi-product by as and response teams base. results user our incident product an loyalty and were and demand drive Exceptional customer customer-facing innovation capturing in with our consistently a efficiently In the closing retention and deals. automation building as whose are More more through are PagerDuty from QX daily customers within momentum year or business gross half at adoption, annual execution XX% now in We more loyalty Intelligence well throughout Event XX%. or efforts of we expansion our increase expansion products. short, above in more recurring comes growing are larger than year-over-year. rates of two our utilizing by Both revenue comprehensive each driven and

XX%. The realize verticals. customer teams platform and rapid per of investment. ops efficient and FY our towards growth. with expand they million more Average As industries creates grew innovation Through a execution, and XX% across more continued those annually product PagerDuty use beyond our built their automation customers compounding foundation for time and their enterprise, the ARR return DevOps functionality advanced like they to go-to-market consistent we to and deliver upgrade have value, on AI that quarter across of durable, spending first above shift than spending than of quarter for by grew all PagerDuty $XXX,XXX fourth increased Customers ‘XX $XX,XXX. exited the penetration increased year-over-year more $X customer within during opportunity digital each

managed. and is to management incidents. IT and As urgent, the fail manage PagerDuty better humans rely efficiently is traditional success, work. to current needs automation to dependencies detect to It’s work platforms account it the Other service that’s will our modern to unstructured facilitate modern prioritize events businesses digital work complex infrastructure. identify ticket-based. a automate of hybrid to business by investment work on be and Modern issues and perform driven or by is essential for in navigate who or no customers underserved environment, type longer solutions. purpose-built how mission-critical work and it This

automation more that use offering acquisition in DevOps with complement IT our automation flexible and and brings of cases investing and to that are With marketing like serves Catalytic, We leadership same offerings sales, augments new and we teams. in our workflow value teams for a business workflow functions our Dev no-code the current finance.

talent We the surveyed of welcome than IDC XXX XXXX their entire to services released need organizations difficult offer the and reported More as productivity, These Ravi at production have need capacity acquire outpacing underscore the to becomes efficiency for and and at half team any trends hard is are rapidly thrilled this technical expensive learning end that and reinforces the the all innovation. Sean, retain. survey proliferation and for of developers to given An of workers, automation Catalytic more approach. more machine Service time. in PagerDuty. than to

standard Our market both operations. the innovation focused cemented as has and for PagerDuty DevOps automation digital

incident broadly, In We more service both round-robin and scheduling. In response, our for data to operations, more both for business. work relying time-sensitive to signals, of users and teams two digital the the of believe risk solutions, than DevOps, general actionable now QX, of orchestrating PagerDuty ITOps, year, most XXX flexible and or orchestration we operations by AIOps, range scale suppresses efficiency provides the responsibilities. response to allows our with and investment centralized are the diagnoses to signals and unstructured response, process focus the customer our prioritize cost expanded automated Round-robin the data operations. PagerDuty’s automation. automating sources, is remediation. no reach scheduling availability we innovation incident a more now incident customer itself. customers deployed teams availability. mature ops in and Increasingly, enables from of resilient process high-fidelity decentralized automated platform incident service throughout of or return and integrations in world flexible, provides a lowers PagerDuty our extending on shipped on This the platform intelligently Event orchestration automation automation on-call and more event noise, We combination wide security at so over to time capabilities leveraged have across other time value can AIOps, teams compounding our and deploy implement IT quicker on enabled We and business converting than critical and products time. new and fiscal their to which operations. the

our ‘XX. teams. integration Our closed of product our opportunities diversifies high-value Operations, of traction substantial fourth addressable offering, revenue further Catalytic second Service new our support with accelerates several roadmap by and opens our into This half market within addressing in market The Customer to with paid base. continues deals FY customer gain a the product customer opportunity platform

more its adoption serves and leverage Our entire platform manage a scalable the trajectory ecosystem. our sorry, Asia DevOps, their outside this ambitions PagerDuty And needs last continue enterprises, digital IT will serves across cloud-native across in and security. accessible, This years. marketplace activity customer of citizen expect we ‘XX. expanded with coming or critical including additional in non-technical markets cities enter work multi-product see has agile work. PagerDuty QX, anticipate to than as increasingly across a customer, since The the FY in with in XXXX. to employees, our the been XXX business with our to With We needs more than operating company’s upward organization PagerDuty and us adding workflows, services more to significantly product. can most purchasing the across ops its digital utilized other workflows within operations developers and currently expanded its enable we customers. In to customer and and leaders quarter has more enterprises with our between over no-code more automation operations additional XXX business platform and – flexible more recently, XXx, licenses, enterprise upgrading They integrations

result, a $X.X of realized benefit has PagerDuty. the company As with million annual an

platform, trust revolutionize foundation automation. to leveraging believe forward and digital and advancing than will ecosystem, and is never build and We increasingly ‘XX, time-sensitive Cloud or unpredictable by focused on operations integration and our built end It’s orchestration by valuable manage Operations more mission proprietary both talent Cloud enabling to Operations products set important The the the data an extended our has of in to our mission-critical PagerDuty’s Looking for price. become complex for anticipating modern standard world. organizations, are underpin Time and unexpected on for FY operations their fleeting experiences. developers the been identify easy built the It’s customer customer systems by deploy trusted an rapidly data favorite customers and distributed to enterprises. and opportunities and behind complex, at the ever that brands. cloud-native, your to comes simplify more we leaders high the designed technical

‘XX. to scale the to expect operating full our continue efficiently and and be for profitable non-GAAP FY improve leverage year We

and automation flywheel help through We continued real-time with expect platform product-led to incentive only the in activating PagerDuty routes their combines growth, to across land-and-expand to remains market. revolutionize this cloud-native AIOps time-critical investment new goal enterprises operations. insights and leading that response our teams realize

Our exceptional quarters and momentum multi-engine the results growth. several demonstrate durable last over

an and customers our our for users. vision our our guides equitable our Our on strategy, investments focus world and

and around homelessness about literacy. customers lead of to to leadership recognizes together to teams impact causes FY success acquired new incredible a This continue transformation the encourage gain race the performance but in their and the United and inclusive champions. equity the Dutonians or incredible and made hope child of in more our while appreciate we company. also by and further our several of traction learn male in programs. contributions, users week and us, efforts you within only with our $X.XX work and disaster products will digital on time our who around to employees follow payday of than proud and FY market deeply million $X.XX their addressing female drive the our culture X We report. I volunteered for We response, and our I’m in for innovate fast-changing value our Throughout and to the of not PagerDuty the maintain enter service unpredictable values, an they our they ‘XX, bet others to working develop customer stakeholders, built ‘XX In communities our testament across integrity our charitable with us States. XX% great in focused achieving their ethnicity our operations. for to In leaders users as our the PagerDuty.org, demonstrating our improve our and within place Through the high pay FY incredibly impact between globe. growth. their to social in commitment team, ran to relentlessly environment, products our lead. trust I ‘XX, the to foundation will customers, momentum, new of Dutonians upcoming annual through delivering nonprofit and on including equal matched more

and very I With long-term will am strong as turn ability efficiently and Cloud continue Howard to I the and becomes to Given that, consistently look execution, and in tailwinds modern growing Operations I sustainability to standard our questions. forward your sustainably confident enterprises. the for

Howard Wilson

everyone call. Thank to you, good on Jen joining this and day afternoon’s us

results. QX event outstanding year for International in revenues. our intelligence, XX% points the enterprise quarter, year XX% XXX for for We was PagerDuty total and represents expanding our our fiscal platform quarter XXXX. are new $XX fourth products, and at automation use year-over-year, grew the revenue The of full proud our including growth segments, operations. demonstrates traction cases service fourth an of XX% acceleration and of over up customer and Revenue of the mid-market success of million number growing and basis fiscal

XXX% period Our the X QX in year dollar-based net to XXX% in was ago. compared retention rate same

DBNR XXX% or above the be and delivered to next over XXX% for expect quarters consecutive have above We at five year.

mid-market $XXX,XXX, enterprise in ended and innovation strong ongoing ARR continue We up XXX momentum XX% a and gain year QX with over go-to-market from through with execution. to customers ago.

first with FY up with a our a and of year-over-year free over of QX and to to ‘XX. that QX up We is acceleration worth This which a over of an X% XX,XXX on is year XX,XXX, XX% increased customers our million platform ended ARR in sequentially, grew funnel QX Free was XX% This future companies QX noting provide compared to an growth. our last we paid a tier, on is anniversary introduction $X at annual continuing free paid to is ago. basis. paid with number for it increase late year. XX, provide the to of Additionally, moderate up compared customers,

XX% platform X to more ago. up of tier highest customers than operations This year increased Our plan is using ARR, digital from a paid product. does total adoption, conservative it not metric a proxy our but capture entirely XX% for

with our augmented that available X And comes be This provide ‘XX. products. and FY to stand-alone end, Intelligence, ‘XX XX% of customer plans business a XX% to insights, and professional is Our from are approximately and and paid Event or customers FY in from service XX% and from can using some additional process in basis. automation more ARR on up

We annual will basis. update this on an metric

margin in non-GAAP improved down gross during range. quarter. million Non-GAAP hosting target This Our G&A. $X the fees was scale primarily uptick revenue same compared XX% $X within sales to efficiency of QX of and due the and X% operating revenue a sequential marginally across percentage million our slight on a messaging loss to of or result basis and economies sustainable is of a loss of gains to in year, marketing quarter and X% last or

cash quarter, free flow the operations for In $X and cash negative from terms cash million million. was was $X of flow

positive year, of full $X down was travel of year XX%. last year gross headcount million margin first to to Operating XXXX, million $XX increase or fiscal $XXX a the revenue a loss compared million revenue Non-GAAP This Non-GAAP expenses flow office loss the in accelerated the compared $XX a flow negative million, to year-over-year of includes X% operating of cash growth from up compared year and up XXX basis or a return increased limited XX% XX% was XXX, $X of ago. was XX%, approximately X% pandemic. year for million revenue fiscal to $XX to cash from in XX% which Free million year, was we million to prior $XX year. Now points the as year-over-year. related and ago. approximately negative was was $X to compared million

quarter balance ended $XXX million was investments. we included the last XX% the were and the exceeding range the Total $XXX up million, of year-over-year. high to of of end billings at revenue early Turning ended million, $X This during deferred million we provided $XXX cash quarter with year-over-year, equivalents an cash, increase call. Quarterly the sheet, approximately XX% which quarter’s in renewals.

to XX%. and a We compared XX% million, to of of an expect the range a trailing were provided during in call. top XX-month basis, QX range $XXX our ago for the the On billings billings growth increase above of be last to year

of approximately FY million As ‘XX included a onetime reminder, renewals. QX period from a the early of comparable $X benefit

growth or to year. months at last above We exiting XX% billings expect quarter trading over XX the first be

moving recurring metric, on to guidance, like Before would to the introduce I second annual annual revenue, or ARR.

to PagerDuty of wanted increase recurring inherent XX% billings, million $XXX was fluctuation annual in scale increasing the and which on Given in quarterly the year-over-year. additional of color We with revenue, provide year. an fiscal QX we exited

considerations to which line the line now March as that owing well during Catalytic, bottom was our guidance, pandemic. for to on to Turning acquisition suppressed as past for the the certain top our X includes and which year increases expectations closed of items

the share to Non-GAAP $XX.X $XX representing of basic expect of approximately range loss quarter $X.XX range to XX%. in to margin XXXX, $XX.X operating first $X.XX revenue XX% of X% growth net rate million, of with a negative This range outstanding the X%. non-GAAP in of million. to shares of implies in per we the a For the negative fiscal million

growth a full XX%. the million, the initiating of for million are revenue year $XXX year rate representing to $XXX For to guidance XX% full fiscal we XXXX, of

$X.XX $X.XX, negative approximately non-GAAP expect This negative We net X% loss of margin of shares X%. a per outstanding to non-GAAP share million. implies XX of operating basic with to

event finer user payroll to the turn put expected expect as like Non-GAAP annual to a FY in occurrences. point positive modeling the to ‘XX. fourth Q&A, the to corresponding with some our quarter ‘XX first taxes, moving each would quarter margin are on of merit details operating assist half provide quarter. FY Before increases, is FY we over improvement To to trend, an Summit, ‘XX be I

year, pattern to annual similar merit first increases debt, from We cash influencing on cash ESPP. half. to factors their payments terrific And with interest cash QX, flow below payouts during us follow bonus Seasonal innovation in quarters being fiscal XX% of thank operations a and and trust convertible half QX QX product last team the our expect and the an year of and XX%. gross we our our be expect go-to-market to range delivering execution. and to in for target in and for outstanding I want margin non-GAAP between of four free customers

product Our operations modern to while revolutionize innovation critical given operations and I the cloud the will investments our for actualize and tailwinds the remain up strong the non-GAAP to of that, performance, call transform confident to and are And Q&A. our work business in open vision enterprise, our execution. to continuing profitability. continue scale towards to the innovation, I market our acceleration demand, designed consistent as with

Tony Righetti

do have Okay. that analysts hand. questions We for that raise the our ask team their

number a already. have We of hands raised

turn Stanley. to Morgan at first going We’re to Sanjit Singh

Sanjit Singh

growth. the good, to year, was on Congrats and Great. too. exceptional team It an really see guidance great the to was accelerating

coming and from what couple the was you portfolio? together on of house, So your Jen, conversion wondering is the if product across free side maybe the the are execution mentioned end, of address of things to a paid could sort I terms products? whether some service. on the of add-on the it’s uptake of Rundeck, trend the on lines you the you seeing adoption there of What customer in products, add-on the

Jennifer Tejada

Sure. great today. here thanks from Well, it’s hear you, to being and for

that our result journey. I’m not telling. transformation, the going expenses. like figure more of is and how this broader a meant appreciative appetite for think seeing more of and in They customers particular, early be into people And ongoing in hybrid We to are back very out digital same and solve office, trying resolve that folks teams out work due problems interesting of environment. our in most have is queues. to for incredibly proud if that still employers time-sensitive operating won’t been customers. And I acceleration think, Cloud that. are we’ve incredibly automation, of things super increasingly continue their every seeing service becoming has away. can’t case be to that story they they DevOps have our people people by our their going offered urban to the But actually and of the flexibility through design a because we’re can’t some it’s have hours proud the ops office tickets are continues. and definitely creates, year, the of get customer way, for adoption team distributed customers, we’re get a moved They to tailwinds, because will their are brick-and-mortar business digitization bring now in I that to current employees. where even of the many everybody in locations. their the In And out inflation, are macro Long-term wait day impacts the and

by We like real-time the has count innovation that also These go on platform built this consistent call of in kind very to that’s to for anything And of for And think, we’ve incident what seen kind together I glove. that our things really way, I hand healthy the digital customers creates in operations. a product our specific attached. focused extending led lead response. really us in foundation

the our moving So lot in just favor. a macro of

across innovation. that retention our maintain and selling seeing our best-in-class gross focusing selling customer part good so strong I’m I up of really have service the teams board of customer teams, what loyalty huge or our really speeding teams, on free-to-paid on like perspective. execution and support and And from product sales conversion who a a say, of job the it’s just value would solution I really the really finally, Now improving our whether execution or done and team, all customer

have to create opportunity you invest. to As it, that try to value an know, understand can creates for product, our free really customers before used get it the they to

focus better that think managing at better and we’re lot around getting have of and right conversion I process now. it a

Sanjit Singh

appreciate… I

Howard Wilson

capturing around just thesis in broader we XX% capture how ARR. accounts free and and market. do But we really because than focus customers the that that was add. our around Maybe of mid-market is ensure our the really I for can enterprise jump behind more The

XX%; you customer if XX%. look are numbers, so above enterprise of grew in growth that the at And by customers And just that above mid-market. $X $XXX,XXX, double-digit grew and number we’re million, the seeing

as results those designed and in working showing the retention. that’s planned are numbers, dollar-based net So up including and our

Sanjit Singh

follow-up sales question, Howard, sort of teams, Makes one guidance? marketing assumed finance – for walk And workflows you wondering the appreciate you Jen, around ARR, I of some there, it’s in all was of contribution the the move make to and why cede in you makes floor. just through year understand Jen, comment Catalytic any and into full parts, it can for Catalytic terms rationale two that’s The if sense. have you teams acquisition. these in I teams? the much. PagerDuty contribution Howard, guide, the is And of the sense that help associated And whether Thank you maybe us there could is for with if from terms very of business one I’ll for then can revenue, the color. of us to the more

Jennifer Tejada

us already our to And you. are mean, that they pulling I customers. I’ll in point Thank direction.

use in resources, customers etcetera. sales, have legal that finance in us We and marketing, and human today

our could workflows, we was we determinant. that demand. customers requirements see DevOps more very have built more around So for platform the the that workflow also those know is flexible But intuitive,

become And that – so or has serve to less the are user, customers, developer that. they and citizen our telling the and workflows said, important us creating more flexible I offerings technical like

about Chicago how works a our I roadmap. to a us of also I’ll really great so that. provides I’m development serve perspective. good little bit a expand to acquire about financial It capabilities. use Midwesterner, team cases. no-code accelerates this that in our all let from Howard feel new strategic a talk acquisition. So It these Catalytic some is offering product a can about a It enabled

Howard Wilson

$X perspective. million significant guidance was the the in line probably from so a And Catalytic. for X% year. the certainly, a bottom but from for see And a perspective, This we But see early revenue, than startup, guess, not I of that strategy financial less in from total us young, a contribution, immaterial profitable. a bringing Sure. given acquisition expense we’ve with that a line revenue from perspective, our incremental incorporates around number we top

Sanjit Singh

Thank Understand. Howard. you,

Tony Righetti

Okay.

Sterling we will from Next, at hear Sterling, on join JPMorgan. come us. Auty and

Sterling Auty

thanks Well, landscape. question join just actually you. going me it’s for side, ask and let my one from to And competitive really about the

I of of traditional think you the it well response light release other you As generally? in Can faded. contrast? – win that Atlassian earnings a timely us Lightstep. incident ServiceNow’s and under And around look solution, competition of compare announcement how that give any of when sense the at some update and there if Splunk kind more is feels of like rates wondering out has just as of does

Jennifer Tejada

grow just our really much customers for infrastructure that also incident lays upon. a essential we focus innovate. competitive broadly, the innovation more our technical sees improves incident as think And us ops, AIOps, customer it favorable, the about not to think to The now you just built, I broader we PagerDuty integration service from for And be being a ecosystem if it landscape for and in us continues response, around Yes. perspective. foundation management,

less earlier, risks resilient products. we see So out think have changes. make much proven, And are other I less customers players don’t to there that taking

is us. is and a competitive well. can isn’t of line we from with demonstrate the lot loyalty and that anybody breadth, very there The continued And good offer our continue think PagerDuty at the there unparalleled. is success out every be we this are AIOps the earn a seeing of bottom our automation so scale resiliency I coming to that sort incident they depth, together, the work position. of customer trust convergence in offering response, the and real to as customers, see where their for of said And the to We platform. day And there work

Sterling Auty

you, Thank Makes sense. guys.

Jennifer Tejada

you. Thank

Howard Wilson

you. Thank

Tony Righetti

Okay. Thank you.

we Moving from on, to our Truist. on hear from list, Joel are going Fishbein

Joel Fishbein

this Hi, that, the as may Sterling’s thank is of you on enhance Version Rundeck and results to competitive you out release. tell is X.X that love great what’s question, a new of I’d And follow-up congratulations your is the could us which just in well. coming positioning. Jennifer, if sort

I interesting. think that would be

Jennifer Tejada

confuse the – in Rundeck if Rundeck Automation more doesn’t what hope with people. integrating and Runbook our But teams well, or cloud actions, really into this as so we proud Rundeck call Well, closely delivering have of accomplished – really Process solution. actions as it a that I that now framework also

into the it and for PagerDuty. apply easier and to customers DevOps to easy of it’s use for be actions IT easier in cloud, our trial, means customers was that to and go direct used So really to across ITOps buy beyond use known across organization, driving what other integrated cases historically can as Rundeck parts and the so easier

seeing the easier the PagerDuty response response and seamless automation workflow of try to and incident incident what more is So you’re in acquire.

as So company. things motion is for excited I’m one the Rundeck about a land as us of a

Joel Fishbein

Thank Great. you so much.

Howard Wilson

some to hear of come June because these innovations. since product about And Joel, event should our you I more you’ll have exciting publicity, in Summit

Joel Fishbein

be will there. I

Jennifer Tejada

top it on is Howard of today.

Tony Righetti

Joel. you, Thank

bring Bhavan Suri, Moving let on to me you on.

Bhavan Suri

congrats. quick questions. And Two add you. Thank I’ll my

in One of is but is. heard know bookings it I conservation certainly them, cash there what inflation, on it are of you probably sense Europe. else, tactical, we everything customers what large saying revenues, new in mode, you’re wise, Jennifer, because from And deal-flow some wise, companies touched obviously, our a seeing, is recession

potential but [indiscernible] seeing SMB the the of close quick are what and you mid-market, happening there? outcome sense fairly have in or guys during You what’s some protracted Europe, given

Jennifer Tejada

Yes.

people in and little about for production And etcetera. a costs, I reduce the I same. automate talk remain operations think mean, to the to bit ways cloud that. leverage Let’s look of more continue tailwinds their their recessionary will to the to a environment, more

some So I those continue think of to we strategic underway. are see efforts that will

represents we for Ukraine is And a in think I seen on speak our costs as challenge and automation think rising rising of potentially inflation just a of very tailwind to the immaterial combination second. you’ve then and of signal. the the that talent I’ll and for got broadly, total Europe represents change of about More well, supply costs overall. going buying roughly When a amount Russia in XX%, business. haven’t we XX% what’s Europe a revenue because

customers operations continue manual maturing from to drive and looking things their digital business. across away for can to there process our where their we more in efficiencies support So moving they see

Bhavan Suri

but Cloud operations No, and and it But on you would up have at you that’s the the then historically, touched is a a hierarchy I helpful. have I like business Maslow’s been businesses and transactional moving broader probably look you I at of bit, right. think as of And insights, businesses. you. analytics Thank this have little question, as Operations concept at you sort data, have separate, of this there look data, that look

part. X about pyramid, roadmap think the is that collection your…? big will of But already that prescriptive, collection. of about that years, you it, And part getting we So, you is in X a do How think which top part kind to years? I predicted? are of addressed the How prescribe should is

Jennifer Tejada

solution. and started brought when big mean We out in our to was event already invested more part with set product product that now AIOp we do broadly, that today, a that have of an intelligence first Bhavan. I what

So, on in how predict make but from things incident machine deep, data the going an data, proprietary scenario prevent to set are PagerDuty again. decade happening to than platform, improve more learning to that leverage not recommendations the only a we of or occur, across a

and we automation very, a think year. So the it’s use early over one part to we kind our And that’s I the iceberg – and solution, already last growing reasons there. AIOps of are of XX% big tip our in very our why the solution see a both and offering, of of

integrated different than into any been is there automation earlier that across much And see every learning recognize think your that for in I is the can teams the It’s going provide which like more call. relying get providing platform think the an the customers get that back, to have more incident on value comfortable, runs of that’s where I to opportunity overall the self-healing, of very offerings intelligence and roll run. as starting they other mentioned easy as it, to and are automation time benefit comfortable it’s safe you platforms event more more workflow.

Bhavan Suri

helpful. It’s

will We tip it of the pyramid. Maslow’s call

Jennifer Tejada

peak. There the best to you of to go. game. that’s always Like I the part climb am the trying

Bhavan Suri

appreciate I Thank you. No, that.

Jennifer Tejada

Pleasure.

Tony Righetti

Excellent. Thanks.

going are to at hear Bennett from Chad next Chad? Craig-Hallum. We

Chad Bennett

for Thanks Hey. Hi Howard. taking Hi Jen. my questions.

So, the kind last can year, in terms customer and went where maybe service kind where we get fourth and and that during update, at from process, and SecOps we from now completed what think year of ops of kind the of quarter And have that penetration of to, use the an looking where sales how growth could year or and standpoint? execution, upcoming kind we case the year we progress that do sales in a the of that ended? business potentially

Jennifer Tejada

top-down is sale Howard, perspective, I jump more of will very start And if a product. a what ops service still we know. that. in, me to customer you there. seeing From that’s let are want a But early

been company half And some the have has to few referred one of been deals So, the significant by year, of back which leaders from in another. those deals a great.

From just definitely a security for issue. problem And of we senior unique a is a leadership to us. vulnerability So, six what just is problem. are the the interesting on perspective, platform security threat environment, a is what’s about really not the a seeing kind and shift like last security in It’s focus heightened of the that’s somewhat user really months, resiliency. given sort

in our the isn’t But we into story, there wouldn’t it’s I separate future. a don’t SKU hack our think separate and customers prevent integrated has response a safe. put a trying center. we have of It’s your of part There you you happening. don’t lot that in your for there So, operations regular respond We position but PagerDuty incident data security in that going say that and to And quickly today. to incident can from response and growth how our can it’s seen a a do separate users adoption keep SKU of but well to yourself teams a happen. numbers. not to security it’s just those breach something know how continues DevSecOps a traditional users. ops, about be and from or more We Not

Howard Wilson

been we Yes. good seeing have And Chad, add, what both in Jen I as said, traction would areas. those

growth. an have in seen we give terms each have on They but that how shared for haven’t the grow both we of update those We call. to have periodically continued to this quarter, numbers planned specific numbers

Chad Bennett

And Okay. or net retention. then on maybe a quick expansion follow-up net

disclosure expansion number. I what before two-plus make until that driven versus net base expansion platform or kind the would I I about ARR. pretty of good I But users, kind expansion we and how on of great XX% the to should up-sell correct, think have historically. think on guess of majority in until backwards? go Howard, you kind net harped up expansion of question two-plus So know XX% it, be, expansion user net net net – But if growth by up see now, going of cross-sell, has a been I we forward, it’s kind think now, but am have the product would product in I the my

Howard Wilson

it’s me question. say shift first new let is of would is by seen part right. we last service the operations more is customer adding plan, But users just to ops. two get our have interesting users, the of what’s how automation, and users still one the growth recently, I products So, represents What or years driven over intelligence It’s either principally that your X digital like event which products of additional is adding product. our it’s not

about think to and it’s on had additional then still you it, users product. if So, primarily the adding

how would not that flow in that’s, unusual work. So terms guess is of I

looking sustainable. terms into In that we five expansion, that’s And And number the in this our seen on that, forward really is have above progress of like above next net are year. getting see dollar-based pleased orders view terms we being XXX% for of now. ourselves with we that

customer or In that be terms would make levels backwards what right, of churn, downgrading. customers high go could of

say retention if gross XXX% at look guidance for our giving terms am And next folks you year. would mechanics. The I or in Yes. above what XX%. of I is the to pure just So, is above number, it’s been consistently

Chad Bennett

the appreciate quarter being on again. it. nice Just you, Howard Howard. I job Thank

Howard Wilson

Thanks, Chad.

Tony Righetti

Wonderful.

join at like Derrick hear will to Derrick, we us. Next, Cowen. would from you if Wood

Derrick Wood

strategy see wanted teams after kind line? product that a I the of Yes. Congrats to to the about having a be on year. go business, will a to bag of into if from dedicated I be the plan ever great or everyone. product AEs? with of line part think any absorb core separate a to go-to-market take? on to you that the and the Great And core sense Will SKU, Catalytic. how to finish guess start go-to-market, or latter, will that And long you sales this for do as

Jennifer Tejada

initially make mean didn’t at separate Well, we were all as to we it a to that learned sure Catalytic, kept the their with looking we from Rundeck, With allow into are Rundeck. product gain momentum disrupt they just I Rundeck that now. company. we roadmap right some coming and lot

teams, what flexible IT The So, with they ways be and and leveraged the it’s centralized there like flexibility deploy of or we whether Catalytic decentralized. a call DevOps all can is different or by some to that customers. in workflows lot workflows, would today smart to our of functionality

improve and response workflows customers our increasingly work to were get a operations and Catalytic faster in and or to some and So, flexibility everyone, to work perspective. doing more to just IT in already traditional connect it for everything of done in that accelerates incident we easier the perspective connect DevOps the make detected

like to Clinic the anticipate really some them have and they Bosch, where Mayo business to they – and are getting and with understand like on we hope PagerDuty Catalytic’s the at and most like cases etcetera. that the customers, use then platform. same value from bring working replicate time, So their And interesting customers

it’s learn going lot we think a we early but days. still there, So, to very are

Derrick Wood

Thanks. color. is anything terms be into investing key where focus focused partnerships? Year? it activating the to then, the market thinking in as so in I should new to new Helpful going Jen, on guess going most channel, New we mentioned forward. about a you And routes are of And pertains you

Jennifer Tejada

Yes.

of some have that partners. We efforts with we at looking are the accelerating strategic

are in we us down and mentioned market, start-up Marketplace kit. sort expand we to to part past, things acquisition from us channel their perspective, even good and of of And at within serve AWS start-ups as need with as mid-market or tool have see our reach I As has look in been enterprise. customers but also the platform them we particularly both a the customer been continue the for a AWS a to five that today, doubling six that has they great to

ourselves. don’t to continue have with broader get really not currently the all will of I regions to that important. are in we go after, we to footprint mean be like to opportunity relationships lot strategic today, of So, Working we and to do global partners that that in need a

about really the as So, looking leadership, markets how of can with we our expect more to is in don’t Dave, be put can have you hear really feet And And to at street, I doing about job future. we think good well. thinking partners new will that regional a where important sales in we the work those. prioritize

Derrick Wood

Congrats. Great.

Jennifer Tejada

you a I you in Summit long at June, hope much. Thank been see so will I time.

Derrick Wood

Yes.

You bet. Yes.

Tony Righetti

more folks. couple A Okay.

right hope you. next We ahead. Shrenik hear that for from said Kothari. will I I Go

Shrenik Kothari

for momentum Shrenik on This Rob. the really by strong driven great Yes, is that’s right. quarter, multiproduct. Really,

Bhavan as a some follow-up to Chad. and I the earlier So, of questions, by think

but might break I have or Like about follow-up. is so customers you the this was it versus if missed around? for time out And large it quarter? trending that, last Sorry, then how did NRR a XXX%

Howard Wilson

retention breakdown healthy quarter. segments, what question is? think see So this that we for quarter. Shrenik, of We Is dollar-based down – retention. net are provided to broken XXX% our your I previously you our dollar-based We across haven’t all net sort referring the that have

Jennifer Tejada

Yes.

deals, growing ARR respectively, I teams done which the really in are customer small a spending good would shout think the numbers. to, XX% drive those that revenue and large the of they good cohorts deals multiproduct our balance ARR because million look XX% predictable. make And are a or point to about to $XXX,XXX deals, striking run have done go-to-market give transactional really large I you flywheel of at you deals, I done, at in job rate and same if more between our continuing time, we getting multiyear strategic the $X out deals feeling

Shrenik Kothari

Got Jen. Thanks Howard. it. Thanks

good. it to trends? to understand, the know I and just little terms like a sequentially base bit, upon I from a like wanted quick the funnel touched wanted how paying I really bit, last follow-up, seeing like in of much mentioned you growth the are of in rate just one top to or versus conversion, the X% understand conversion you So, follow-through but up touched the terms know it quarters. also about upon And year-on-year customer of you picked trends

Howard Wilson

Sure.

expect. as provided haven’t this, you numbers model is designed the on we as doing know, we but specific what Shrenik, So,

enterprise at create double-digit the into growth. platform both. So, of we on our behind and that’s And on to part of customers get look customers, early funnel enterprise thesis to the this was a the overall growth visibility help allow and to mid-market companies we would number that could mid-market when that and feed then in our us look

for. So, than looking significantly that customer base. in higher are result the growth we the And exactly our overall that’s paying

Jennifer Tejada

up the I still go And excited at look at about that together, above free paid we revenue growth that’s that and Yes. add we when pretty are would fact to just am average customer XX%. And $XXX,XXX. still also I that, per seeing

So…

Howard Wilson

$XX,XXX.

Jennifer Tejada

Sorry, Thank you, zero. $XX,XXX. a I Howard. added

Howard Wilson

$XXX,XXX But $XX,XXX good. now. would for be

Jennifer Tejada

awesome, are that’s not yet. not be $XXX,XXX Yes. but will there we –

Shrenik Kothari

and Thanks Howard. it. a lot Got Jen

Howard Wilson

Thanks Shrenik.

Tony Righetti

out you. today we over things Matt round And turning Thank with will you. Matt, Hedberg. to

Matt Hedberg

like Howard, a we have Hey. the asking something for ARR I while. disclosure, think Thanks. I really been

going and to do be of better billings? something on that than smooth I growth a us metric certainly that I out sort appreciate So, theoretically, guess quarterly are basis? And help Is you a co-terming that. that update should

Howard Wilson

could basis perspective. disclosing proprietary – movement an So, – plan annual from effectively there we up is Matt, because company movements just by that it the our could to of be end on feel a is provide some quarter

continue that be provide But that So, we have picture. the billings to on give complete billings trailing think basis. quarterly we we will that, going information to much that I better sharing, at look are more they annual thinking this and will our billings guidance with people are a an view. XX-month about you And obviously, to triangulate when around

Matt Hedberg

may should we there like then I of interpret it being in are some going not of give because opposed then how metric? Maybe it of volatility terms you be is like smooth sounds to quarterly ARR there – more kind a in it guess as to

Howard Wilson

help the billings does of Yes. year. starting give quarter the much as we year. but That this is making that indication will course relative correct. And it at I mean you so of the we each of volatility, through an see you it’s not where start point to it the the we are provide are then billings progression the

Matt Hedberg

it. a Got Thanks lot guys.

Jennifer Tejada

think Matt. out also that committed point I confident and ‘XX. mean we for shared our outlook Thanks, by profitability. we I would profitability are to time to the have, I time, first our FY on

while excited sustain leverage about to ARR into last rates. we very we in our fact And expect are this leverage enterprise. the going in are have we to particularly the we and at momentum growth an seen to year, continue only that annual number, that improve operating the So, have growth not sharing mid-market year, these scale and addition seeing acceleration we

So, company. exciting the pretty for times

Tony Righetti

analyst no take if Currently, you have home? us to further we questions. Jennifer, would like

Jennifer Tejada

the for of for was ‘XX company. Well, say all, thank being just you, FY an today. everyone, Great. here year to first want I In closing, outstanding

an provides for Our accelerated ahead. durable growth and excellent the growth years in sustained foundation performance

non-GAAP the you to ‘XX, and earning trust we be remain every FY We on focused are our profitability of and committed day. well. customers in Thank

PagerDuty (PD) 17 Mar 222022 Q4 Earnings call transcript