PD - Earnings call transcript Q2 2023

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Tony Righetti

Thank you, operator, and good afternoon, and thank you for joining us to discuss PagerDuty's Second Quarter Fiscal Year 2023 Results. With me on today's call are Jennifer Tejada, PagerDuty's Chairperson and Chief Executive Officer; and Howard Wilson, PagerDuty's 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 beliefs and assumptions only as of the date such statements are made and we undertake no obligation to update these.

During this 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 XX-Q, the included and the on recently made and information Further other with our including as results make the most differ our Exchange we filings Commission, company’s XX-K that to materially well filings SEC. are and in filed with Securities as financial cause could subsequent call With over will that, the to turn Jennifer. I

Jennifer Tejada

us Thanks, Tony, thanks and joining today. for everyone

These QX, of exceeding non top revenue an or at in the high and continue end guidance more our growth well We efficiencies XX% improving for our year-over-year GAAP adapt above to efficiency, illustrate year-over-year PagerDuty's seamless capture to multibillion PagerDuty. balance while scale. customers both that the and digital by when is improved fourth must to ranges. experiences than Operations market of ensure efficiency, execute consecutive our in and improving durability growth, both -- opportunity enables dollar margin XX% operating consistent improvement and grew essential and our infrastructure At In a strong X,XXX quarter line is as of operating developers ability This our priorities. Cloud bottom basis moment operating results another quarter growth points. margin we our the

profitability to continuous full partners, dedication non-GAAP demand customers next world. digital teams thanks service the their of continued trust and from and full improvement deliver We QX as FY around our as and greater on and in ‘XX, journeys the maturity platform well for profitability from the towards year, track their focus and Our accelerates on business year goals. our this to -- remain for in year

place ARR on a high combination months in above consecutive an the position of investment, We based us. average are especially payback remained trust rapid of PagerDuty and X% environment. macro two implementation, achieved return period uncertain quarter of strength, of retention in XXX%. in churn The seventh below we of our customers dollar an proud the incredibly net and puts

growth $XXX,XXX the expand Our well operations than includes segments healthy diligence strong experience PagerDuty. drove process across land total regions. Even annually in did performed We more as cycles incident longer teams some we accelerated a paid macro in as our with automation, our growing accounts and demand saw a in on in and uncertainty, we sales spending generated favorable with and more for larger AI environment well, response which deals, accounts, business, in and current and however, competitive pipeline see as year-over-year. motion The digital ops contracts customer EMEA. often faster year-over-year exceptionally

and which consistently Our inside reliably companies. driver expand velocity after high to remains Developers DevOps primary growth PagerDuty business champion land grows continue and of as their choice the quarter quarter. our platform

long priorities. Our cloud adoption, and DevOps key interdependent, acceleration, infrastructures for increasingly priorities to central complex, top Digital and enterprises. transformation remain term business are tailwinds, digital

our competitive the operations through innovation. set we advantage digital have standard to expand We and enterprise product management, for continue

During our of the highlighted June, Series interrupt I rise across hybrid enterprise. in the Summit work

enterprise. customer of stacks three IT, product service. indispensable connect security, corner We for operations. of platform Today, orchestrating, core and and keeping power uniquely our recent from customers to making of customer every the finding in customers' all challenges interrupt running, developers digital familiar announcements Cloud The our experiences Our is user across is services to demonstrate our time of Operations detecting, intact, with the base of work capable developer digital already innovate. and tech Operations for to the enterprise, the automating PagerDuty's modern types Cloud

adopting easily monitor for rapidly to quality service up PagerDuty Developers, availability standards SREs, Service maturity customers. set available reliability advance generally and made organizations we by for can those enable incident and and operational service owners, practices for responsible to best standards their response. standards First, digital service.

by our design rapid steps code have response. deployment automated no to Second, flexible flexible we and announced our incident more workflows, incident for platform customers their processes. major of and Many enabling making customize incident extensible of asked

creating building now With channel process use instance, an For XX a the and provide. box out with customers Slack every starting incident a can or call their update specific own Zoom an blocks or workflows, sending we of status the minutes. then define incident

all wake customer and first remediate up actions to and without are integrated are Automation to to to at the additional issues the across and needing users, scripts. when PagerDuty now run automation their capabilities specialized processed teams, are including without human experts service entire platform. Finally, time events PagerDuty available available diagnose, the validate, intervention

PagerDuty efficiency actions with intelligent this businesses seek incident digital operations, in teams, is while Both automation and incidents increasing ecosystem As will essential. continues The leader their confronted automation be generally later and year. available workflows launched into XXX we plugins actions. for AWS to install These August, box incidents of can and PagerDuty's AWS diagnostic deep above now gather automated services. In telemetry grow, minutes out integrations. automations the for in

actions automation for Salesforce applications Zendesk. and launched also We

XXX% online You'll XX% the year-over-year month and expanded expansion the year. with later relationship travel PagerDuty shopping an ROI more our offering of about to realizing Travel lot customer this of operations excess at first Dreamforce. a trend QX, in a continues its platform in in XXXX. In hear service after global renewed up

means and stakes opportunities outages For in you event growth, the revenue that have of for higher disruptions. companies travel

customers. and customer than from QX, a and $X improved navigates just availability more annually. realized utilizes rebound for grew than ensure excellence. reliability The to incident $X divisions. developer in where response customer experiences. enables e-commerce, post more million million business six customer below saw with to global while of XXX our our delivery productivity its benefit improving and We interactions With in and a customer through users As gains pandemic more great spending small giant months to the X,XXX center estimate million compelling leading better delivering cohort platform PagerDuty's portion able users of company growing with both to our Automated continue and large across efficient our to productivity return trends total these renewed operating leverage three increased X% a retailer and night, today. data, of unit and e-commerce, now they travel, currently and addressable joined a invest update a between automation, for more than in PagerDuty customer of two The In users its the term XX service than global the users customer Australian on one in stores thousands similar total the year than X,XXX experience be more is every we XXX% a more across penetration market, on across We customers retail driving model. Android economics, comprise thousands devices and process investment. employees their

mature average, incidents mobilize telecom, to quicker, experience from retail digital hospitality, to problems and Industry benefits enterprise hours of they financial and both critical the released of and alike and XX interruptions. face off operations leaders increasing cloud. travel solve this we technology IT, to most disruption and startups PagerDuty developers acknowledge more two seven improve every digitally month. security, services, operations sooner and mission state and our by are and all conducted of positioned operations faster outcomes. Our report maturity across recent to IDG, demand organizations customer for software The More they mature research XX June The in teams. innovative and on advances span better service and hours underscore more complexity, incidents, work hours minutes responders they organizations fewer minutes incidents more downtime manage resolve the

these to experience, annual $X For better PagerDuty million savings a typical with on a of an time translate savings of XXX%. customer up customer top of and X,XXX return tier investment average responders, to

rather Our remain transforming improving efficiency in customers and segments climate. in inclusion is the discretionary. PagerDuty's see verticals that and PagerDuty they transformation the while maturity in across trust customer power operations, to and invest equity legacy. innovation, and companies critical diversity their of economic cornerstones transformation. building to accelerating investments of their and all the this digital leading Tamping platform are employee continue We productivity than tell through us trust resiliency mission

we several in on PagerDuty including [GigaOm] its best award for individual fronts. for usability, named and and (ph) return Response are solutions. During leader AIOps PagerDuty the best recognition results GX radar earned best the platform, quarter best investment. on Incident

of magazine the one places Fortune Bay PagerDuty named the in work Area. best to

pressure brings from Ops. developers The are welcomed the Board. rise, financial under shortage expertise, and demands security Bill Losch Okta than continues, all while PagerDuty understanding of for an background Bill of technical customers. deep more enterprise operational talent and on ever enterprises also We former while CFO, to

opportunity. For a is PagerDuty market manifesting robust this

is execute, on and customers' billion in while designed solution are investment their the their on partners sustaining teams problem drive our of Howard goal to dedication profitability increase remain self-funding. essentially a critical confident We We our and we as capture revenue share return solve accelerating resilience. progress high incident losing high to ability path customers growth, on mission remain operational focused Our our to to for call solve greatest loyalty, our our of forward for want I trust turn ingenuity, look questions. to where every and to $X your and revenue. to With I'll thank for to that, their challenges. customers our support our over and our

Howard Wilson

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

operations digital our our platform of strength the demonstrated operational and results quarter Second agility.

While want their progress we delivers. We profitable perform accelerated to scale And they sustaining companies of against the innovate business. competitiveness our trust that's order in of and to to be QX. one partner enhance PagerDuty believe in growth to XX%, plans can at

year year-over-year on platform gross over grew year over we throughout provide an Total compared XX,XXX QX net increased As with our results references to a GAAP call. over ended paid the X% ago. in quarter Free with operating ago [indiscernible] QX or future range period. year-over-year, acceleration our year. our XX% to International XX% funnel customers was to growth. within QX of the customers of and revenues. before on margin XX,XXX, retention at ago. $XX was for by to increase up XX% compared up and ARR paid remained XX% the companies of this XXX otherwise to total or and release XX% revenue XXX% XX% prior above XXX% that paid a year in consecutive same in We delivered reconciled to XXX% revenues earnings are based the year. million for second marks This our in are stated QX the basis period modest posted fiscal the XXX% unless non-GAAP one were quarter, I of the the all of Revenue dollar the in present of target results expenses above continuing X% to XX%. results our of fiscal with seventh free quarter, to recurring a annual and from to annually to continue be $XXX,XXX, expect

Our million accelerated quarter last and of outperformed our scaling a operating to the compared as loss of guidance, improvement program lower negative same Compared we XX% second X% revenue, than of margin expected was or or $X expenses. million loss quarter revenue an in $XX in to operating negative initiatives year. our quarter

profitable deliver As expect to better breakeven a FY ’XX. Jen we than a noted, QX and

to compared quarter have million than modest Now shifted from $X of to to cash flow was Both loss last and overall a ago due $XX year. in to million quarter favorability working QX, QX compared operations were a from factors: as second to three of cash, well that expected as in DSOs, the million reduction primarily capital outflow Free lower of $X mixture cash cash of year expenses. an $XX in period. measures million first collections the was better

free expect flow or in negative slightly be quarter. cash we in half second the breakeven better QX to fourth and For the

quarter with sheet, high the Turning revenue to other equivalents in during million, Quarterly was sale deferred calculated balance XX% billings also our bookings, $XXX quarter's cycles and cash which in quarter year-over-year. expectations an An the $XXX the more elongation million, investments. year-over-year, with up which $XX last at we the increase cash, of were ending geographies. Total million of dollar ended call. softness reduced more opportunities. XX% initial to ended XX% Europe provided range a bit common experienced was XX% below for

million, which economic We uncertain billings feel into July a to to growth met in QX the range given extrapolates $XXX XX QX, of appropriate expect to a XX%. trailing of XX% months the ago On range be increase year and the estimate for This trends environment. billings previously we basis provided. were is XX$ compared an

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

the in factoring to economic Turning guidance our now current conditions. and

approximately For the a to third attributable share rate representing of revenue $XX the with This per implies Inc. to negative million. of of of XX%. the Net PagerDuty, to margin quarter to $XX fiscal range growth negative XXXX, shares in the to loss X%. X% XX% $X.XX negative of in basic operating range $XX outstanding range we $X.XX million, expect in an million negative

XXXX, growth XX%. fiscal to the to rate For year of the a $XXX in we revenue now full million representing $XXX million, XX% range of expect

of guidance We net per Inc. attributable $X.XX implies shares are loss X%. for to share X% PagerDuty, $X.XX outstanding million. negative negative an to of basic to $XX improving with operating margin approximately to This

partnership them. our across Before their I for close, like globe to I and for continued thank would our champion who customers teams the

revolutionize and We up scale and is pace of business towards non-GAAP actualize Q&A. for to call performance the With innovation to that, continue in work I rapid as will profitability. our Our to critical confident remain open our vision we designed operations. transform

Operator

Thank up you will you we we Instructions] Weiss] go bring the question, ahead screen are can your to you. And on much, with come so Howard. [Operator (ph) Jen you going first, please. [Keith to with

Unidentified Participant

for guys really very the on nice nice you progress question, taking And profitability. Thank quarter. Excellent.

to Just sort to positive cash and conservatism kind feel a free about guide [indiscernible] wanted I guide. the the in that in coming flow good of of system. ask

question about. that's a lot investors are a wondering think key of I

Our down numbers enough. coming low

and guide get investing if these the kind basis? is the the guidance on FY like So is you of you. for how can us other full that is Howard, to to come for the I this down of and not kind there sustain comfortable you where the then excess just side you're is to long the going on levels profitability where year OpEx profitable there going that that right talk wondering a to need for Is is much conservativism? was flexibility How stance And lower. on room this go-forward could [indiscernible] sustain be we there methodology, protect through ’XX? towards that further path of investment OpEx term or to Thank fence,

Howard Wilson

thanks, Well, that in lot question. Keith. Yeah. There's a

unpack So I'll try piece piece. that to by

have the tailwinds. the business guidance digital remain that adoption approach. is, We perspective migration, driven are our I our would a the tailwinds at haven't or think what I when rest DevOps say we true. from we looking -- cloud contemplate transformation those What the know of we So acceleration, at year. changed that’s that always or cloud the remain Weather still

balancing And so, larger we with seeing we're the are cycles seeing a for sales strong demand signal some and deals. in we that are elongation of

levels is we into duration of terms billings close as the scrutiny be as larger -- diligence. work there, from high of our can So that can the changing. that are those you there a but deals of are most factored reminder, year is from prioritization the it's may ones have and to sorry, our Whereas that deals the days. of And a increased longer of for subject seeing full XX deals some in deals. take process perspective the still we're just see or of just extension are within being guidance course actually The

this bit So is in how about from that a of perspective. for a I factored and we've seeing from in a into a not thinking we're would efficiency been and the the path perspective, What view that of new say taken to terms little of OpEx from something we profitability. terms us that we've topline

be in do talk structural over place about thinking more helps been change us put last we that about have efficient. few me you've We the and heard how quarters, progressively this, in

just not a is event. this one-off So

G&A automation creating within been through our capacity been So We've functions. cost for rapidly increasing an using options exploring incremental and we amount patients areas. lower like ramping those of we've in

the So that business. capacity build we us to that drive allows to need

So and a year. on in non-GAAP profitable front we that have on a expense confidence help basis up of number be profitable view too a basis us on being to initiatives the us non-GAAP the to QX around next setting the

Unidentified Participant

the some in Is Got have, seeing are some and operations loop that for digital putting customers. the it. the operations competitive of the just incidents not the that really response is there or so and on functionality for competitive platform out close about environment you're you sneak If loop yet? and is help the change of guys ITSM in any far guys of vendors basic It kind are management that close environment talking ahead are competitive as of that like of that could more I environment. trying one more what their these out the IT seems there just to Jen, vendors

Jennifer Tejada

of think at talent even matters I deep better. of purely definitely customers technical moats of coming of those for workers. that penny more would capture has employees retention technical Because important, the operative a like as and again. There I've our of say participating and to never is is integrations, continue quarter In longstanding the there every becomes I I've And think XXX a lead market the about seen of we product shortage. to us I customer improved, because does your this built look still perspective. feel getting you going said this -- a resiliency talking is always because in on trust to talking, has lot our in has and a availability and a huge our been this question service resiliency. employees I when in for environment, it more product from word while every -- I market. of foundation say perspective productivity the this number around and favorable door efficiency talent a I just revenue competitive build think differentiation is then expand environment, our we've at say from

to sure productivity on working through incidents. facing are they are that major customer improve not working time, losing and trust initiatives product, want And and that those revenue so and on make folks they're

Unidentified Participant

so Thank Outstanding. you much.

Operator

Okay.

Next will going Joel, bring to Joel Fishbein . we with you on. Truist

Joel Fishbein

Hey, you to helping thought story the about. there's I the ROI choppy story I out thank the my customers, tells a Can of and can I beginning measuring of wanted guys. using prior and you that control PagerDuty and two think really with are about maybe none execution that to and that was excellent you probably that and talk and called about know think ROI intriguing you telling for I congrats some to you this ask but us that, in pretty that that that more weathering how questions I helpful. they're because you're lot importance of you taking talk would be what through can tape us Jennifer. that

Jennifer Tejada

designed a within another to saw XX% improvement weeks For mean, sure, respond the opposed uphill. in one the a the lends behind customer, application, without easier first up is back-end to having an think which infrastructure competitor of PagerDuty to doing I at of I platforms almost an Right? mean right? were and happens few immediate in against and trying huge appeals that, over mean pushing this intuitive. see deploy in years. think of as and enterprise other it acknowledge is sitting is any incredible years, more an fast enterprise and and And like We of time they And customizations provider to an SaaS customers we like bake more -- time almost I the our running. and a a traditional There environment in deploy, they're like not over recently days is It's implementation. ran it. are to off where but see with wheelbarrow hours, consumer like days, This a incredibly platform case itself ROI. that software

from during and have quickly of of And -- our we of itself payback of you view short and across work and And larger measure into that ability give an And reduce responding I our their of their think time. consumers time see from so them lot areas: example returns all investments are because in automation our to of looking and customers risk get all very on that in then and made outages. period And And XXX to, revenue area it. subscribership is customers mouth immediate back then we've we tend Right? by undertake become teams, an where that lends also one just we're that amount two loop for ROI with close based top loyalty they there our significant that The that you well leads helping really to seen the customers And trust. incidents shared those our last months. improvement money itself as I driven that not on happens. so to resolving money providers of services those the issue developers ROI, on lost see lose lends the orchestrate customers, to in and period our a who consolidate the putting significant some to to tools to that Two, return heavily to the way how that can innovation; we're reliant but a that I'd you immediate manual to they have The different platform. built that's say is average is. can a on-demand the couple automated So come efficiency, quantify. is observability lose and work immediate when lose have learning One, of just their Right? you the reducing that

Joel Fishbein

Great. so much. Thank you

Jennifer Tejada

see Nice you, you. to Joel. Thank

Operator

Thank Okay. And move ahead. Please to Matt Hedberg. with you. is we'll next, go Matt RBC.

Matt Hedberg

you interesting. said Jen, lot. something Great. Thanks a

said And on can because of think think of maybe organizations. I lot click a infrastructure critical double important really scrutiny, a can Just it's you in time mission that? the for I you IT You part we're more point.

Jennifer Tejada

hard to asked Matt, hear. you're I what think you is,

means. And what a drilling that have infrastructure talked and right? comments you mission I I my critical also decision. Is about think that being into around asked part essential of about

Matt Hedberg

That's correct.

Jennifer Tejada

Okay.

it's consumers, They're So demands goes particularly and users become right, space incident think something the change for will our to customers response, lower. them, when end the in about when quickly much important consumer their switch cost patient is more They more less their because wrong. you have of risen.

So not mentioned, Joel's And like, quickly. good. they'll lost switch I is as a to to can question, competitor their revenue experience if be very

our seeing employees operations with digital the And complexity in in an so argue there's ramping And that and the the with so, and harder. lot also even brand, customers it's their more new to technology become would they're in getting also number availability are past, the your so uptime, deliver two, increasing digital one, most their employees harder great there I reliability I'd products infrastructure, manage, organizations, incidents revenue services really if job And job right of up define the of not harder gets your but because has a that it. is about way resignation with of and environment. to of dealing think security understand of

away automate anywhere So customers occur, moment. and from back impacting is not in the and important detect seeing incident learn can at incidents, that work to this you revenue costly from something do and that to they they a those well manage from our them to become happening the very really when future incidents prevent issues investment we're before

to be asked this their would And you available spreadsheet and say, here's put down, on all second a the users unhappy. very with this then product job actually some can critical But Like, developers that our and mission an if going The Phonetree. to say to manage they're this get Excel platform is, time use our about they we're environment. say, care tools crappy in of never you them thing the you to must go I deeply tools, kinds have customers.

senior developer champion trust way lot their PagerDuty, that So it and to want jobs effectively. enables through they it, to of with their a all they management because the do them more our community, work

to efficiency was it's it in make them joined war about learn how the is employees more your has and in the the that that the first really I in managing their we protect learned community we've be been sure more identify experience. to And again, to will thing that and how ROI products so, improve when identify use it I one how enable technical And terms ago about reduce loved customer productive revenue years jobs. effective in and it, of employee want to important services six the I in that from over they terms ways in terms when PagerDuty the and important, and of generation most happen. of the that and quantifiable we incidents can the way is, create address easy that productivity, revenue But talent

Matt Hedberg

into helpful. my That's And it maybe nice a segue second super was question.

ever of talked been you about You environment has the importance uptime and and reliability, also said competitive the better.

some not that bring larger things point long happen When your of one had competitors customer inquiry more your at ago. even outage here like an think that does I way?

Jennifer Tejada

imperfect, software and has everybody and All incidents. outages is

And customers ours it to other just Right? there incident causing these but does More where ago, actually started resolving customers road many I just than response. is and analytics, through for partner responding our prevent from that It's than helping our them call. the become automating and almost are into on think and And on single and tasks. -- wondering that, said deployed part to only of the the integrations when XX teams and paramount. coming many, that platform to in call certainly We lead including actually And up every so, identify this incidents that like with each incident opportunities automated enabling have automation a that's sort live learning truly not automating takes new about itself, AIOps, a we proactive of we in just years automation We're ways them actually problems trust mundane you're demand process for from of responded in that of a the them seen comes talk and platform. sure, innovation, that well us. automation of influx on those top creates think to But then of isn't the future. I a happening, like us simply the incident better ago, expanding high more workflows issues. in robotic work we from better added try them it faster, because not the around, for built where customers years leave get And right moving business. XXX through responding events we've is I Having preventing to occurs. platform talking work that, to when and a in and challenges the course, from about flow and complex customer to if that they or

Matt Hedberg

Congrats Jen. results. on Thanks, the

Jennifer Tejada

Thank you, Matt.

Matt Hedberg

as you. we're Next, folks Rob got near Thank Day, us. on we've And come Baird. going at Rob, we Instructions] to hear the and Oliver from some [Operator over Labor on join road.

Rob Oliver

Great. Can you guys hear me okay?

Jennifer Tejada

to Nice you. Rob? How you, Yeah. see are

Rob Oliver

element to cycles? some And of There Okay. actually for certainly your you? my well. and commentary a your you. is those elongated which relative Great. EMEA little bit cyclicality sales business, doing solid. more question is of just like around are there's some an How of I'm counter Just appears color to

not are the guys of impact. some these immune hand, you On other to macro

obviously, might in great seeing or guys And are of new then top And else terms done wondering, (ph) this a any on this [David changes Was that there expansions? the your you it color, flag in was job. new logos? Justice] adjust you're adjustments And there? I'm that, to that team time environment? to anything make So you has add would on of more

Jennifer Tejada

encouraged predictable is, say Well, all demand our large just I'd and us expand Calvert, a right? strong product execution large see. taking deal we and on the velocity pipeline the I'm the deals see little Russia, the Where I -- the I a our Katherine for great really the about and really of combination and longer. tribute uncertainty lot performed is response of our she's excited what during welcomed that's to a EMEA strategy, saw of what super quarter. which around And with continue that's a And US demand lot and to actually by continue the thing by because days. I'm for new inflation, our large of the a didn't of typical Really still land growth reliable bit a in of most a was lose that but From ongoing exceptionally conflict dollar some CMO closing strong think the remember, digital a that perspective, diligence XX deals, business, kind is, product In first We to deals, and motion, deals products drives that's very additional some led and our think we AIOps a strong demand. cycles well saw business, driven having services. into large and saw incident And us. saw are we creating we for quarter. and operations become very there. of we we of been around sales

I So days. talking about and talking of companies I'm are lot about years, I'm a about longer. not months talking software know

is of. it but be notable -- it and is aware us to So for something

I the macro is, stayed it while that the this, first think in a on really of of since thinking uncertainty, this nothing I'll to been leadership saw we in early our COVID. quarter what team on to responded the COVID. days And it's the we tricky, little court has way, compared about we've that how mention by

run how they know against in to they're hybrid pretty Our still environment, talent shortage. products jobs place, do, and a up to customers challenging and and a services have got a in they've sell plan to

very different that so, than And environment.

invest we're improve staying says going course to lot We're today. we're around continue efficiency, that a automation. team to continue in is our sustainable to with throughout the the automation so the lead growth. and invest our of we have the the to of platform really that going that innovation including expand And to our to plan is in going And high process area

-- in the over have So from from we're plans strong a I in our quarters think position, put both competitive whatever we really perspective of dealing way. put the the a us perspective is last with that coming very several and place

Rob Oliver

quick I really for just helpful very follow-up, you. a got Great. Howard, color. That's

sources could ability areas add coming you've where I know you bit guys margin it. -- other guys. nicely? expenses. the accelerate that infrastructure, lowering from, you of quarter those leverage, be whether Appreciate Just more maybe they're some Thank color added of But hiring already have you, around a it of some buildings around where to kind to path profitability

Howard Wilson

sales sales mentioned, create capacity make do look non-quota getting productivity, that. And to the between at a support sell how be to focus balance for the is way folks so that do it right to is globally and easier that being as quota salespeople our that we one look and areas Rob, how we the we -- around about the carrying that I motion. really able seen, we've

without fact, intentional us, so doing in approach. through functions, which we've a a use particularly get number leverage a of certainly the the record QX work gaining certainly of rate. add but within was so helping hire, quarter done hiring same We're headcount the our is for within functions, automation continued So to having with the very at we've to us been G&A

that's So also access market us also the term. and in Chile, those elements sun strategy and that offices us talent And location the there to that our helped the long structural have follow are efficiency to of allowing up positive of in And for have little for all Lisbon a opening us. and also and model more a effectively. these are use are broader

seeing structures really future. more we've for we're and our more that setting up us resilient, been changes the are the that agile making organization our so, around And making organization

Rob Oliver

both. you Thank

Operator

you. Thank Okay.

will next welcome. Hallum. to Craig We Bennett go Chad Chad, with

Chad Bennett

Great. Thanks taking for question. my

the last if was issues But the cycles I'm sign -- on sales question, or kind the up following additional or Jennifer of not that maybe just elongated Just more EMEA [indiscernible] then logo you expansion driven? answer the offs enterprise I sure new So on driven again, and there. saw on not, heard on side the

Jennifer Tejada

of and time. taking do think in we the sales successful. seeing think lot time. of they're a team their I us multiple biggest of segment that mean for one about this enterprise some I any need an side makes of And Right? the we Generally, small deals the resilient spends Because our doesn't environment But don't our expansion benefits our grow just vast of majority enterprise. on is it that in huge to longer No. to talk POs some when again, things, starting -- I close, as deals context, of we larger necessarily mean, over I of -- be customers that's where by our business

Chad Bennett

just kind year internal not look sure the And Yeah. at solid it pretty customer it expectations -- plus you because what were, but over looked of XXX,XXX year. -- if it's growth, I'm

worse. if guide trying get color that in seeing things for guide guide, X% to but quarter? Is is just quarterly you. your encompassing And Again, you XX% today the reconcile for quarterly normal everything XX% XX% else there assuming not there? is the a and you kind so quarter, that we billings delta. in about that a also to this times, for know Or little think you don't but you mean Thank saw of any delta. X% maybe been billings, even of versus bit have Is don't you I guide you're all growth would what equal. to XX% or or it kind

Howard Wilson

Yeah.

the of for there quarter the in that we've to these deals. is lot back get customers growth bit of if they are -- in above XXX,XXX, of So this seeing approach on Chad, effect one. The we lot deals. Jen's we saw XXX,XXX a doing above a of lots in those point, customers And customers started some of those XX% taken I'll that jump a half last that, of little smaller

did business all deals strong. velocity remained we segments our some high transaction larger What of is that see those longer. So took across

And so, extension respect quarter, this to with with that have into we of the the extrapolate started to for we our had coming that some given. did we duration billings up view in estimate see in

Chad Bennett

the job it. Nice for Thanks it. Got on appreciate color. the I quarter.

Jennifer Tejada

Chad. Thanks,

Operator

Okay.

with Andrew, ahead. have go we Andrew Next, please Sherman Cowen.

Andrew Sherman

Hey, are you guys. doing? How

Howard Wilson

It’s for Andrew Nice on corner. Derrick.

arena into to Does mostly sense going service. are resilient developer the like where than So, on is it also and feel Jen, DevOps but priorities developers, more centers? now? you're sell other your budget priority right highest what's And within budget the buying customer

Jennifer Tejada

cost the is understand years the the really our some and I don't like think of that's I few cases se the a last in in lot or customers that problems than we But demand think about audit one personas. them seen up the CEO budget in the board, think I themselves. money. our more changed really Because way incidents all to the the committee, shift different a personas we've that's per things across solve of

this, measurable the about that's slowing long and that projects term environment. talked intact the really that's because digital tailwinds term. areas one long well critical DevOps when transformation. in the or they and acceleration, this remain that's in is Some And stopping think immediate term some those in measurable have I we've remained about And the always business. in to cloud their adoption No

connect low churn as essential observability, than in thing I customers. think shows our well We and just mentioned that the net of into infrastructure. that increasingly our where applications retention centers buying systems, retention. other our really monitoring different we're cloud unlike more in we and freeze saw to, not try that market And XXX and gross lot The because is impact. in in providers of before, this to become stitched up our days and And COVID recover in I take early and dollar of we behavior. COVID the a We're of seeing sort stock

I over platform, of a in ERP, and selling I've my critical that not not said, I've mission apps parts in worked these a like want of are not supply be a to product, not other a apps problems. would discretionary said, career. software chain, solve, a I've lot having worked I in worked don't feature, or Now

of think I experience are response, and customer revenue environment customer moved things service, digital to going to related services. important like in because continue customers' our products to has their generation incident be security, this most really to

more important And for so them. it's just become

Andrew Sherman

that from any then contribution about monthly. in hikes to back in and I of there's price XX% guidance. if think are half the And Great. customers billed wanted the And I Thanks. implied ask Howard,

QX? how few next the those in to that about did should And impact the impact So of we have think any rolling quarters? over

Howard Wilson

Sure.

we the three is so to are pricing primarily dimensions has customers for this, positive that platform, and related a had which and fully So back price side, impact. new increase to new customer introduced a on the acquisition in play March, to in there was

we there? factored about final last We and on end that's also year. what And you process and Andrew. our then -- is had, I working spoke increases into that's introduced Final which on again that question view point your the quarter renewal, well think modest the in and your through of

Andrew Sherman

how of over the roll impact quarters? the next two The out

Howard Wilson

Yeah.

so to continuing resistance. think obvious, that that are well. shared means value those we're any the the our I both that customers deliver seeing is -- information So remarks that in train. to customers are is really a deliver we They're the And we make working Jen in not value they ROI business her high and to prepared

Andrew Sherman

you. Thank Great.

Jennifer Tejada

Andrew. Thanks,

Operator

Okay. Instructions] go Thank William over you. with Please ahead. to going [Operator we're Matt you. Matt Blair. to Stotler, come

Matt Stotler

this one the to turn are or any seeing rate guys start but the how kind just with on pay talked any you. you conversion. convert it's you have in you customers customer environment? Thanks going off the see of have in questions. thoughts to going about to on Obviously, forward? specific for change taking good that rates, to free of conversion Do Very to Maybe ability

Howard Wilson

Yes.

has seen seen such in Matt, then So, of new acquisition, healthy conversion, have other they sure good been if always we convert. terms good term us thought a for their in long and we've use of they -- free trends. how potential customer this that And or terms responders in program capturing developers and early we've PagerDuty like the about of experience a making

quarter. long transition though, that know we because still on the And we saw view we free customer so has the that that us. take really term mid-market a our that in to seen when terms expectation at funnel we've isn't on, is and rapid focus acquisition in enterprise this us last and look allowed But which We enterprise strong our free. like for with of segments, mid-market working

Matt Stotler

quick a investing. a ecosystem. Got the not you have on you. a talked about but something huge Obviously, contributor then as where you're That's being partner And maybe helpful. that guys today, place follow-up just

things? little, partner and forward And a on of to invest you guess, efficiencies to environment in look look that? be channel continue in prioritizing maybe how you are for that does of to market into the look side As fit and this go forward, as I kind going what you

Jennifer Tejada

Andy we spending bit village, tell about I I coming own people our But and every mean, that are to always also the we our then important Those I developers AWS Salesforce. on with customer the It's our AWS quarter. time I Reinvent. so technology integrations will DevOps talk where go think into Sure. and time Reinvent particularly lot of our be for a are. call, be to of around about service to market both we've Adam with. in continue product talked spending Salesforce, partnerships is that the ops partners, past also all there. and think I a our at solution us think partners we'll about that like mentioned for like and we're and Dreamforce, quite and

case have may use own that opportunity I fact up easy which to ecosystem. a for to it's customers we underestimate their our that think expansive that how integrations don't is and The then customer sometimes and opens API those to other have all integrations users. build for build our use a

for of we new into And more to look more us. and become be continue partners and expanding so regions verticals, an that new area at as important. increasingly investment then And important will

So the the very partnership. really activity, we we and to the market try right efficiency Japan our of instance. prey accelerate in and would lot to model, grow efforts to as say go out area our organization of looking a between a this overall that measured and into focused been we direct with I'm be And experience, customer our have experience put my because having partner output. figure by impact try a I to in by and But channel a that venture spray opposed market together partner for in how of expansion to have lot not and effectiveness blend sort

Matt Stotler

Very helpful. Thank you.

Jennifer Tejada

Thanks, Matt.

Operator

our Can want -- participation. to thoughts this your I looks thank have for like you, Jen. over Howard It Okay. you thank exhausted it final today. quarter? pass questions for I we for everybody to any

Jennifer Tejada

that of appreciate to the our very you. in I our PagerDuty everyone for the just you all demand say weekend. and everybody their we hard joining we that thank customers thank long which We and going execution Well, in positive Yes. just us. remain safe and And of see very forward of us. for proud want Thank to is trust I employees want all holiday work place on

PagerDuty (PD) 1 Sep 222023 Q2 Earnings call transcript