PagerDuty (PD) 15 Mar 232023 Q4 Earnings call transcript

[Call Starts Abruptly] 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 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 as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial measures is available in our earnings release.

Securities these results factors included Form to we with on the could in XX-K information including made make financial Commission, with well Company's differ the subsequent and further XX-Q, and recently as that other cause filings our as For most Exchange our filed filings and materially SEC. are the

call will I Jennifer. to that, over turn the With

in and FYXXXX. today. Thanks, Tony, We us another and strong fourth solid joining year thanks, delivered quarter everyone a for

We and go-to-market significant Revenue customers points basis we of durable ahead during are innovation grew product plan FYXXXX. one-year net over profitability platform XXX of and margin through X%, demonstrating FYXXXX. with growth up profitable now non-GAAP operating We year-over-year, and XXX new execution. disciplined our added achieved to XX% an

we QX, ranges. guidance For our both the of bottom exceeded top line and high-end

quarter our Our $XXX million $XXX year, QX revenue was milestone. and up XX% previous surpassing the the over first million, revenue

in revenue and mid-market. and million on enterprise our in $XXX operations surpassed winning annual multi-year digital combination also through of product in recurring We focus leadership ongoing a

$XXX,XXX We the of to on opportunities. XXX QX consecutive quarter net XXX that We ARR, the XXX to above ended we XX% level. in PagerDuty than Fortune where their up retention exited modernize with operations relying XXX%, year-over-year. see nearly half contributing significant year our ninth the continue with and XX expansion was of Dollar-based Fortune more at or customers

from mid-market and enterprise quarter. We the our with of see number transactions continue customers to high a engagement in record

improve our accelerating of a sustainably margin cost to was operating Non-GAAP as initiatives result X% structure. strategic

the large we medium three an exercising quarters transaction increasingly While adding diligence decreasing. This sales each resulted customers sizes and we saw in to has approval of elongating more levels cycles executed difficult macroeconomic past and in climate, for deals. well

cases, X% churn sized customers from in QX. ARR, elevated small of some remained While we ahead In customers line but of in below starting with, experienced medium needs. and annualized not churn acquired well seats levels of current

perspective, added landing budget adapted and in ways. acquisition From in authority SMB. a management friction restrictive to customer dynamics these buying principle more new two to tighter new accounts, We've particularly increased

structure investing First, platform efficiently we more differentiation cost that our in sustainably profitably competitive gap. while scale widens and to improved the have

Second, we a are technology comprehensive cloud and to their with their efficiency help successfully proposition them operations engaging ecosystems. to customers operating value streamline optimize

pipeline As platform a now than year-ago. result, mix make a total of up opportunities higher our a

further released increased development in positioned PagerDuty velocity our for enterprise Our customers. with that product product expansion meaningfully available FYXXXX newly new across products teams several

new Status Event releases offering. of as or automation Some Automation our major include that Pages, Actions, AIOps, for and comprehensive a customer Workflows, as leverage well AI service Orchestration Incident

to expand our integrations. continue ecosystem over We XXX with

a unlocks PagerDuty our This wider across flexibility teams rapidly Earlier available tangible human this our Incident acquisition range immediately from generally using Workflows leveraging customize Workflows year, to business operational customers. ROI error, technology customers specific made needs. for work, minimize Incident and workflows, automate operational our so can of team to needs. for Catalytic, and customers, empower capture of we no-code

solutions. customers single time Status to Incident quarter, as customers, have Status the Status other response. detailed eliminates an business. during source automated of PagerDuty to added accounts platform stakeholders and and tools, Pages reducing costs. Unlike and Pages across well We and as the Many from incident automatically updates replaced PagerDuty Pages the for solutions, multiple saving less their key truth less directly Pages to the PagerDuty need post also integrated point Workflows both enabling create updates the securely leverage launched operational to real-time end Orchestration Event during to communicate users Status a

seamless on platform service of product collaboration a Service inside we engineering and Building teams. the application enables new Customer Service Customer to this discovery the integration, Management. between Operations for drive agents expansions. PagerDuty can friction In customers for leading customer application efficient trials ServiceNow released application and the February, popular reduced

continued initiatives, on delivered the to creating tightly customers the improve and compounding we platform platform made which FedRAMP are progress deployments. of All reliability addition, our In security value comprehensive integrated, for path and certification. launches many wide to with new PagerDuty

Looking platform continue of a across we expect Cloud. ahead FYXXXX in to our to rate innovation roadmap, investing Operations the high

add on to additional for We thank our service one other date. teams our of operations most engineering AIOps business design enable workflows product automation, process offering, automation, workflow expand will customer productive, flexibility teams cases. want our and build and further distributed for our to to use years I and innovative

go-to-market despite progressed. as evolving also year well, tougher executed a environment the teams Our demand

PagerDuty launched model, standardized and we product AWS. partnership advanced go-to-market global our year, the During Japan, our with

QX. which remains grow, we very realizing both expansive a a TAM and consistent the go-to-market teams throughout remained year, of and trend, closed for Our economies ARR continues number customer Customers per has and the up our are engaged XX% to of customer in scale. QX been transactions year. record

significant We incident operations industries highly they in efficiency volume and their duration, continue noise productivity. derive see cloud, even enterprise maintaining reduced the to as security from regulated while customers increasing and compliance,

customer our million The Global of response over They expanded and customer deal evaluating Consumer This added quarter, North invest our a actively FYXXXX. deployment. are and automation a with PagerDuty in $X including six-figure solution. service Bank XXX recurring signed also largest now AIOps incident process American their annual expansion, operations revenue

initial enterprise conservatively we for with the the modernizing anticipate of outcomes priority has PagerDuty with CTO, customer payroll, on three financial been has By become leading bank's partnering closely an operations. for operational year. strategic A as XXX% management cloud-based months. as partner ROI the aligned software their since a We a human of provider for over PagerDuty and little resources period XXXX. of payback

to they operational Cloud efficiency manage quarter, customers, automation. Operations Customer response across the now major Process Service Automation utilize They and incidents the signed global incident impact maximize expansion a In minimize Actions, with pair Automation, PagerDuty's seven-figure, They to three-year their agreement. with fourth PagerDuty and Operations. business,

we had multiple but IT to decided to customer solutions previously In marketplace. European-based in been expansion in year, PagerDuty. delivery utilizing addition QX, they reduce a closed has a effort and globally standardize with since PagerDuty. costs, infrastructure an on standardize their six-figure to been company XXXX, food a The Last PagerDuty solutions

In retiring addition to adopting point are solutions, Cloud Operations platform. they our

building customers, first easy. the PagerDuty making of communities at mission-driven customers our equitable putting of customer, championing great we financial and climate products is to launching our Part Our product, efforts that value both champion we the by center and global reflects our advance the innovation, volunteer, the means and accelerator users to company things users, building an PagerDuty.org and diverse deliver equity our In serve. organizations. support and the impact FYXXXX, portfolio of

on build and diversity, We our inclusion, also equity continued programming. to

groups expression a across majority focus in both values we improvements underrepresented the technical ID&E report, women third people result equity QX, and and progress single number roles. released and of underrepresented between In leadership. the senior cent achieved comparable In tracking in leadership, and we our increased worldwide path are These including deeply and of pay PagerDuty's within team. systematic We employees sharing annual our FYXXXX, our an held forward. PagerDuty gender are the of

do. While encourage work we we have report to are to read we more you proud of I progress, acknowledge website. on full the our the

never The their in digital of complex cost and queued higher. has to to modern fail modernize the address the of Organizations digitization. of of and rapid all nature operations face disruption interrupt work Ticketing been solutions need operations. types

partner long-term value, Our strategic platform paths PagerDuty faster customers to demonstrate to greater need choosing as for continue Cloud Operations their and engagement. their as their efficiency and the for

the in cloud our for continue imperatives conditions long-term adoption to transformation, macroeconomic evolve acceleration, to our tailwinds, DevOps be digital near-term, While customers. continue multi-year and

to behind our we as operating our strategic long-term opportunity, We continue in are margins. invest improving priorities will confident our and such, while

are durable we large early a We a building growth on market and focused still company. profitable in remain and

products our we strengthened competitive market that several and brought has innovation advantages new monetize. to begun have Our to

of high retention spending growth and than customers loyalty $XXX,XXX by annually. Our net of are levels continued more customer validated our

digital opportunity platform to on inspired innovation. by for customers, PagerDuty infrastructure to and produce to our I'm is to and dedication, businesses by capacity customers, focus our the your rely you maintain partners both near-term your loyalty. navigate their our long-term Thank us. in ability our of the challenges on, free team, to digital and confident seamless teams, experiences, and work, our to and your to ahead our execute on energized

that, Howard turn call I'll and your With questions. to the I forward to look

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

a Unless a by on for to of are references revenue, tough and full-year. strong on and driven continue in to non-GAAP profitability release non-GAAP Our our on on a macroeconomic fiscal retention retain we are reduce costs, results be customer year company, basis make being operating otherwise to as stated, rely Operations the high to environment, call. progress continues Cloud protect talent. And goals results posted our earnings the durable, that results was customers reconciled to our basis a growth transactions. And all and demonstrate before quarter profitable the what continuing GAAP a noted volume fourth expenses to profitable we and and PagerDuty the

XXX% international up was QX quarter, XXX% We has contribution and to same at delivered last The in for consecutive $XXX in total of or unchanged the from one DBNR the from dollar-based QX in of nine was million XX% above year-over-year. net XX% been of compared retention Revenue XXX% fourth year. period year-ago. quarters. revenues

customer based XXX% However, modeling we the range in second half FYXXXX, the being of low-end with a the at of to a from range. XXX% data on QX of are FYXXXX

a the year-ago an had paid year-ago. approximately XX,XXX Total and XX,XXX paid over slowed of a which in on we in increased XX% Free to spending QX Consistent customer small, segment, platform last compared companies levels the with year. grew period. XXX, annually elevated grew revenue to up X% Customers annual of the paid medium business over $XXX,XXX growth. increase macro compared total recurring and to customers from XX,XXX, to to acquisition of XX% slower our churn, by

the in our paid free will offering With our focus our enterprise continue ARR these and acquisition segments on segment, SMB. from XX% of over leverage mid-market we and in coming customer

expect paid As in total customer of in a X% result, range to XX% to growth be a we FYXXXX.

more ARR XX% that over products up and increased X XX, from or to compared In customers million in XX% FYXXXX. XX%, basis, paid point customers year. and was a in up last using of ARR terms XX% of with lower an $X QX to metrics two FYXXXX, than FYXXXX provide on annual from we

fourth with at revenue, exited shared which $XXX consistent level. call, the million derived was we Please And year's note at the customer paid call on which is On last that we account an quarter recurring customer XX% year-over-year. QX the increase annual level, calculation. were our this numbers numbers in presented with of

and Operating XX%. a to margin QX same driven million quarter $X improved was result XX% initiatives. by revenue and annual income our target across the scale last the quarterly of operations range XX% The of sales year. a improvement million compared gross revenue gains long-term economies as within marketing in loss of efficiency of X% to X% G&A to remained of was $X of our sustainable or efficiency and of or improvement

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

$X year-ago. Operating year, million or a XX% $XXX $X compared Free similar X% of X% to income up to was fiscal full $XX increased revenue and compared relatively rate million a cash to compared million flat year-over-year, was to and fiscal growth million the For margin million of $X negative a Gross a revenue cash $XX year-over-year. as XXXX in up flow million, Operating $XX headcount X,XXX, XX%, negative year-over-year. of XX% or revenue was million FYXXXX. flow loss was year-ago. was

and ended the cash million, this, an a XX% million, provided million above increase includes which quarter billings. Turning $X $XXX ending up were was We XX%, year-over-year. the the million approximately year-over-year Adjusting result guidance call. XX% deferred during above calculated also the was Quarterly increase cash, revenue investments. the in of for approximately at quarter's guidance. the and This with to equivalents sheet. multi-year last ended balance in of prepaid quarter XX% billings Total $XXX $XXX

QX We XX%. to approximately growth be for expect billings

in of a on XX trailing focus months fluctuations our last quarter-to-quarter a an compared the billings. Given increase billings, trailing to XX provided year-ago during basis we call. billings and months were XX% On million, rate above $XXX

period comparable FYXXXX of from approximately included one-time of $X million the reminder, renewals. a early benefit a As QX

trailing expect first billings XX months XX%. to exiting the growth quarter We approximately be

for current small new and particularly itself the for in from in challenge manifests factored increased are in we guidance, providing In general sales environment, a which and macroeconomic and projects longer increasing of on cycles spending, smaller larger perspective medium volume purchases, topline conservatism deals businesses.

per PagerDuty, expect implies of rate For outstanding million, quarter a million XX% net to fiscal income the representing to $X.XX in margin $XXX $XXX XX% of shares Inc. approximately share of an diluted range range to first attributable revenue and XXXX, to of of growth the we the operating $XXX in X%. with X% in to $X.XX the fully range million. This diluted

year rate and outstanding per fiscal $XXX full an XX% to of X%. This in expect $XXX $X.XX million. range to operating $X.XX fully implies growth million the X% XXXX, of For attributable of income diluted of revenue to Inc. a net PagerDuty million, $XXX diluted to representing to margin the share XX% shares we of approximately with

like to to I questions, assistance Before would moving FYXXXX. provide modeling with

and one-time include to payments margin plan and will on million include payment be our debt. first expenses full the We XX% target increases. to for QX incentive $X related in QX, our convertible short-term our a non-GAAP outflows XX%. expect range of seasonal of between and quarter annual cash QX severance merit interest gross

With second half better our a flow in their to flow, cash terms would margin cash to to margins. our cash higher operating respect least is free is what flow points And at I economic an margin. we free for than like thank to been of full-year, expect environment, uncertain free be the for the couple continued partnership. And expected customers of be

revenue us customers XX% to offerings strong growth significantly. help Our high a and with and that operating expanding this efficiency operational demonstrated above critical Operations work, expand margins year rates our retention Cloud continue position our our transform put in

for With that, call the I open will Q&A. up

Okay. team. questions raised for hands Thank we you, And have do already.

Let Stanley. first me on Morgan with turn bring Sanjit? we'll us. Jennifer with And Sanjit to Singh

the you I'm think questions Thank headwind about of very going you as a churn congrats outlook, for solid you guide? XX% on guide. at we SMB impressive next on and that see was I well. – that a happy remind the that of me, to margin the at full-year around on much is How elevated saw and it it to on Howard, the into full-year look look When end and and the the was taking ARR. when year the churn outlook, year given

Sanjit. Thanks,

So you're about XX% our represents right, so of revenues. SMB

We that into that year. in have given fact contemplated guidance the we've that for this

terms and levels similar of SMB, churn. we've movement in acquisition and new So customer within modeled in both of downgrade

question layoffs. the And the really the and back happy sizable sense. Makes And engineers jobs outlook, potentially to because pretty see and they XX% the and revenue layoffs see big of to still assessment update – company we on of of then was more Are leave just sort announce in that's of to relatively plus the quickly one? I go continue coming then terms and if what's finding one tech growth, sort to on the next the there? on on PagerDuty question

anything, and given we a bottom seen Yes. while of our top have question. say most thought I'll I continue to and very see we we're Sanjit. what is of of guide. outside to you, and those important become of decrease the because to improve layoffs more our less, their more help we're is if their customers are response fact, infrastructure. productivity, cost engineers engineering, their incident with what do the looking in line lot to in take confident macro, see the that layoffs, Look, would Nice and We've finding has

and right no this very at it question current right executing but we're pandemic a tough market environment team platform in the is had very been So has our impact, the some And executed at that's through well. moment well environment.

can it if to our were degree persists even guidance see high improve, would this upside. confidence a as that that if environment have on we and we deliver macro we of So

outlook. you the congrats Thank much and for Great. on thoughts so the

Thank you.

Thanks, Sanjit.

Thanks.

Next, we'll Hedberg turn to Matt with RBC.

especially Great. from AI Congrats talk level a of flow yes, perspective obviously in my from And guys for really, Can reviewing excellent. had mean the you free longstanding I guide, a might questions on going have focus for high taking you lot guys. AI what AI start your There's think me Thanks results. want Generative I cash give forward? Generative PagerDuty that's a and to been the perspective. on on the us about platform general. Howard, really Jen,

Well, mainstay continue it's platform, been in invest of AI for in. every that an of sure, has a to part our automation alongside area we and

in from increasingly of parts of issues product, arise, issues to think as I was impacts. data customer incident we preventing becoming in been faster responding one the actually places to major automation were in where early And that model response, leveraging moving service. customer our and proactively in our those a through to AI simply foundational in support building in from AIOps, has they customers

Generative It's one the of we in those. of it see AI, dependent Internet a space one expect critical creation. of when a for on that now with But negatives false the mission not AI dealing get lot fidelity right model, content high used business positives things challenges customers large false being infrastructure. a for they signals Generative critical you're are very the good level our is our or of in or

are so efficiency those we're to the to But AI think And very looking us the But you for all the think of puts a across to learning to else. I it I these automate and to machine the et an time diagnostics, can or set a of our per cetera, big in continue use from AI, analytical reducing that some challenges platform determine above some have still and some we root customers for cause things. to data with service is AI when that perspective, right productivity position good it's Generative the imagine, in going role know how se. in is experimenting takes efforts shortening to remediate, where product take time which

super And you That's again all your Thank Howard it. financial One for what you exposure for guidance. Could – remind me. you could I on days? these perspective vertical is color services appreciate Got maybe tech the us helpful. spending, then to a the that. question from

Yes.

become we've more but travel industries and software a Matt, we So cover. services, telecommunications. entertainment, in in that technology across the hospitality, media also financial and increasingly do of terms and have and We diverse presence

to a certain that's those helps within at base able which So movements manage least to us particular industries. broad be

we for with extent industries specific different it prepare are gives but at to able in So a to resilience, their on of to being terms time. a those focus point able some us level needs of in that

Got it.

Yes. you the we're I'd platform what some become an remove duplicate is you real solutions try increased platform that protect revenues, infrastructure protect AIOps our in response have effort point as efforts in those and you incident seeing mentioned, replace that and our where with for now point make that A more improves is of when automation could and the at and verticals costs to to AI look customers appetite productivity. might and well costs leveraging a customers trying are our timed. product, so that's important in in really subscribers

guys. Thanks, it. Got

Thanks, Matt.

at next Joel to Truist. Turning Fishbein

in wins Obviously for vendor ripe taking good question and and some big consolidation. my Jennifer, gave is you're some environment very a I perspective, that about the execution. you've of you go-to-market your call right a now Thank And details in stressing congrats the on on the platform. we're the quarter. on from great for think also talked us

how for ago? perspective on how the it And from understand maybe that was you sales customer customer there, guys, of a doing PagerDuty's some versus – then maybe – and go-to-market what platform XX viewed would a things cadence of I the is from so months maybe some being perspective, the you're love to

Yes.

outpaced I think our branding. our some in innovation ways

with cloud not she's Katherine that services out our really around proposition that products new operations something new is and awareness so building anymore. our Calvert, new And value the broader associated CMO, really

get combines solutions. what's along benefit you response, customer Our benefit leverage of important the those integration integrated CMO when the every also AIOps, from automation you incident service from get across operations, is part very you with think platform focused that, platform. And on. I an is those that teams And of there

the the out them becoming which signal in of responding events these you response, of of issues major flexible from that So instead workflows intelligence, inform just some incidents. some into incident event to to get allows front comes of preventing

become customer into to enables their incident or issues Having themselves effectively customer service the process and by the situations raising manage of ops input part providing response more communicate and teams customers, incident likewise response. with

environment All big is have of how forward. use easy don't an to that to I a understand platform to be step built this where is leverage think in sort And you PagerDuty. to seamless a dev of

build sales a other DevOps new but customer of shop, work the the or they as we leverage what that products us use Some et whether product ability able service even to to flexibility no-code able obvious, workflows the in for interrupt want customers services work. only being the And within ownership built mature call opens is that full cetera, and not if it's be work. way work we they to not incident other not to finance, and up the business, one likewise, teams may response, they're the they enabling service and or cases, to to parts however marketing, be need to low-code work can of

to ecosystem, solutions less environment our go, of point their and well macro within seems less infrastructure service current customers this And helping really suited it perspective more the spend, digital the the platform trying experience less, time and high end and that day, all better, of At in same from for for modernizing duplication your about where customers. the all operations are customers. at faster our be while yet your a comes to innovation customers productivity to level our is to seamless with terms down improving understand end a ensuring

the in. environment at moment kind we're right current that So again, the of right for platform

I could… Yes.

I'm Great. Follow-up, sorry. Howard.

up than now, total the we at just way a platform was I mix a year-ago. much making our to that's have add that that. if are a Yes. And up pipeline also to right is of opportunities higher going opportunities that look showing

of our you AIOps, putting service of customer selling getting message is level the of response, integrated that really different and sales story customer. the a So when for incident unlock automation team power you're ops together,

And that deal generally to do size? just if you… what does It's

The platform that able in will response. and customers our make So the constructed, customer way to, there they an an are they they is cases of is be can effects. could one it customer incident automation, is could larger add but incident could for and two or add deals, some be response they automation because

opens don't their the pathway up it once, So Cloud the within how customer at actually execute an all environment. it opportunity them and to they that create with on but a create roadmap gives to Operations to have they necessarily a build can

Thank you.

Joel. Thanks,

Excellent.

Craig-Hallum. Chad? next from Moving Chad to Bennett

Hey, taking everyone. questions. Thanks for my

Howard, year to that the just drill XXX% for XXX% little net to in gave. on maybe a down bit range So retention you

you about versus thinking relative year seat in historically? So you to terms how that last saw are expansion of use expansion what case

Yes.

seeing adoption the terms as being for relevant key solution, in customers. most But is growth. remains platform making other that or to that still expansion strengthening in us the drivers primary particularly offering around expansion of of AIOps the orchestration one our even we element. seat the of of are more with notable So And increasingly, user within a event is our products

up quarter to increase us this it lands And of to in the multiple per use very end process quarter at reflected again continuing revenue average customers in that grow our years QX. that past we customers customer which these automation, was grow different And can the up additional in the XX% that's now has consistently those – few to in easier it's fact fact of ways grow in has continued for offerings. over and as fact, automation the with much it every have terms and means

customers terms PagerDuty are that's the our but both So in of using and of more of in more users, use increasingly the of up terms of showing platform.

ahead op just then couple flow what in basis And couple of terms free being it. a hundred of margin. points, hundred I you points think maybe margins cash on indicated Got

billings So that's delta should would the that there imply or that year growth that exceed growth for else revenue something is providing there?

Yes.

be as for just full-year, it'll QX. guidance that's trend, on billings full-year to we've which it time, year does. it'll that always guidance the to people similar because guess seeing that the it is So I mechanic guide we for out specific haven't throughout point the over year. move, provided the our clear, that And the the see billings way provided in tends for you'd what I'm to revenue expect if follow you I would through way next to look play at our this flex

Thanks my much taking questions. Okay. for

Thanks, Chad.

you. Thank

ahead. William Next, Stotler Matt, with moving Blair. to over Matt please go

Good Jen. to both. Hey, Hey, Howard. see you

Matt. Hey,

Good to see you too.

Thanks for on I partner the questions. guess ecosystem. the maybe first

is relationships Let's broader partner an on kind the contribution out, at ServiceNow those those update this just get playing new. point. on up, timeline, Obviously, considering relatively ramping How of are but also the macro? near-term

other pretty recently. number solid got We've partners. a of AWS mentioned You

to update So I'd there. a broad get love

important up be constrained and mean, AWS AWS lot AWS stepped from budget customers retire is a deploy us environment to really PagerDuty prepaid growth I able to perspective. us of from licenses. and product factor Sure. a from continue has partners a where where benefit marketplace for an the with standpoint product emerging a in – through to standpoint seen are spend we've a channels

So invest their overall that to has helped a to of our automation and in lot productivity footprint. continue infrastructure customers reduce

looking new feet really to seen that in where too business don't have us, a closed relatively in Julia market market we ground is the Fare, regions perspective a in recently for street. very some a opportunity where where a the the Japan partnerships We've we interesting have important. new we the on a some that's things augment having is new And to deal Japan at regional the partner from who's through encouraging in partners on sector. financial services

encouraged And by that. so we're

and ARR product-led organization But our comes the our growth of still go-to-market our vast direct model. majority revenue from

largest that the near-term direct there, but encouraged cohort customer not at I'm I really the and better us. through our and Cloud our we've really things better some about just even of are, opportunity selling think with who's seen salesforce, expand to getting vision, the the continue Operations embracing

a over grew our and quarter, out. of spending the one customers single is a XX% customers in So sold not XXXK

still whether customers, it's it's within We product have a or or within go whether TAM after of specific. – those seat-based those to functional customer it lot is bases, use case-based or

So could transformation, the out in the that customers they front the in are How their leveraging still processes? like helpful and that's is to with the their full they are in productive. to How necessary be changes partners become they extent? improving think something driving our PagerDuty are helping of I us. how exciting, workflows more future, but

Got the then the the percentage on into is helpful. Japan right? to segue of markets, love outside there obviously, international it. And both a seeing as to second comment think what's XXXX. then there QX, as We double as here just click embedded fiscal get some you love And in on about good color question revenue. consistent in America, just maybe Pretty That's on of guidance a would in you're early what well. North we'd

if to you if I you to start, can death choke or and can I add jump Howard, there's anything that Sure. want in.

to customers customers recover more cycles customers. when those in a it strong smaller have us elongate, where position I into partner competitive what's though deals. pleasing platform in us a with sets in particular had time, than But Even see a the of position number macro really that in same they sales still shows is diligence and we think continue is more we good we're We up the seen had in seated the at transactions looking long-term. from those just record seen a engagement the does transactions quarter. past, are Europe it approvals that lot in some point ongoing and well market with to And been maybe very – trends the on of in been

So is engagement, see continued high delivery including one food really to given the conditions. had talked well team the a about space, wins, executing in some the very we interesting that

about I'm market. it's days Japan. that And early for excited

very cases, really response spend to signaling some to helping has But all productivity, our for will more become consistent pivot a software. pretty an go-to-market the PagerDuty given broadly have onto I consolidate solutions gotten platform. are think that our away PagerDuty I economic the market infrastructure to essential environment, and from and costs, our yet important their summarize that it's important efficient. be they'd an of and for executing is being infrastructure teams cloud and able the they've that more more tougher turned us customers the for environment little of more and towards and think I all corner well guess in is customers been to incident important point market more on been reducing like And

Very Thank helpful. you.

Okay.

we'll Kingsley Kingsley, ahead, from Next, go hear Canaccord. with Crane.

taking the good questions. Hey, for afternoon. Thanks

at the seems think Is margin, look, guiding So I XX you're such approach solidly XX all? evolved model like could it long-term you're double-digit long-term Has that have You your still margins. strong gross almost become the profitable, to operating margin? maybe best higher.

ahead go easy, profitable, Howard, but and I that we've said that we're doing Kingsley, been you not like for answer. solidly agree I I'll you was the way years. really let because like

Yes.

haven't model. we an So provided our update to long-term Kingsley,

So us given model that year. execute most this of ahead that now, current we've we have Right even scale we particularly of for Right within operating kept investor confidence recent XX%. the in valid. given what which at level I margin you'll this are see in year. see now, macro, deck, our the has at happening think is our that still ability high on on And next focusing to guide we've

XX% for above that growth and operating the revenue margin XX% keeping in So full-year.

based that adoption of Status product, impact the customer? newly sense removal, end the topline? the expectations for user users layers or of that then, is on Pages, the Okay. of so and is two any somehow priced customers Fair on enough. released of on And traditionally Or

Sure. Yes.

effectively is pricing other different model the that in and it's models on from So that number of based a for. contract particular customer would that the subscribers

that be expectation is to the could so or And the company. external internal subscribers those

the effectively offering. Status to was just fully So I experience offering end us, that internal to were offering date, and a it's had, new us targets course, it creates external intend what of for the from something This, to of user notifications. customers the we've an asking hence move do before – a to but Page primarily relatively is initially

response are of templates you in set that automation a stakeholders. more it want incident fact, message like capture separate we our level Pages this in we in it the automation a make into on which and message. a lot across with We the and to But what's typically of using using way are some broad have traditional able to Status not is integrated fully Status life cycle person, and even it's publish relying into that to to environment be going super a important that communication of Pages easy drive

released. early good recently is good, that's been signs, So this something only but

Really Thanks, Thanks, Okay. Jen. Howard. helpful.

Thank you.

TD you. will go from from hear Cowen. ahead, Sherman, we Thank next And Andrew

All It’s Andrew Good Derrick. right. for you Thanks. guys. to on see

see to you. Good

there these transactions improve, this future new reps once of commercial is greater enterprises is doing you to macro especially and number record Is expansions specifically in the How logos? velocity? anything much Jen, net days. give visibility that versus of drive into expansions? both this does are the does And impressive,

just motion good our velocity land is. it's a and think expand I reinforcement high how important of

not architected as to that leading the able someone been is, that velocity really making it, well whose larger cycles that high market segments. the when who's perspective transactional person ourselves motion Our and go-to-market push of is demand. to organization, in let go-to-market Jeremy Kmet, gone who's buy cycle a drag the pace of position by And has healthy need need, frankly, don't mechanized into and the far customer we've really And out team this further what our hustle, to the further customers motion. from that up enable this transition and leadership they we drive refers sure to pushing sales put sales the ahead too they a they

them back something, new point, to to the grows then them your additional and case to see we've capture that them add within customer. faster demand, because whether to to opportunities let deployment, grow organically, is customers seat work what them away, enables us and let do move let And through the the organically on see a use or it learned value, or come

served So automation think solution organizations when can where I effectively very us premier well. moment selling productivity improve pivoted going I to the need from think our a customers in truly it. technical said, and selling really a solution And like to go-to-market that the I efficiency has also

the So of just proud really there. execution

helped. I think standardizing our also go-to-market model has

region It how up every time some way. our in this streamlining attacking teams frees So build the is and same creates pipeline.

And the multi-product last thing we've that rigor a and more I multi-product selling. is would lot applied around pipeline say

we but the So and problems really the I'd platform. through understand higher customer market, retention, also year, being the taking to the ramp we're say work than and it was year able year that past. with an narrative of reps understand we're solving this integrated importance than products retention more helping is capacity of multiple have salesforce in to entering also this last the with

So really in go-to-market a position a from perspective. strong

Jen. That's levels Thanks, for I’d currently? there linearity to little did to Howard. a Any added metrics? track in helpful. you are looking would Have indicators bit on any of One how pipeline your great. you, and the that quarter. color be love hear How those scrutiny extra

Yes.

see in in typically or QX looking lifetime quarter. which form. is QX, year of at now. was unusual shape end And of back this was linearity, an not ago a what happen different look like did would terms feels I release not flush to we right an that customers some budget if quarter So but of that

I So just different. think it was a bit was a reflection that macro. And on the

in we seeing oriented year, fact around product more in to sales, acquiring acquiring now is than products so or customers more deliver the Cloud. do the on are is of Operations this multiple this into strength terms order our that pipeline what platform increasingly Going one we have

we've a which this ramp reps as a place And before quarter mentioned, with good had is ever the entered start more Jen than we've of year, to be.

within terms right. good that seeing in are So of environment, this we signals

cautious, we're levels being this seeing base. activity careful think of engagement but still the customers certainly seeing I customers within and being we're spending, So environment, their high about customer in

Thank Excellent. you.

Andrew. Thanks,

in. couple A you. Thank more questions coming

to Next, Oliver Rob Baird. with we'll go Rob?

Hey, Great. taking… guys. Thanks for

Rob. Hey,

Hey, Jen. Hi, Howard.

Hi, Rob.

great couple. I your Appreciate of time. so questions Yes. asked But far. Lot a have

Jen, so some impressive some had on guys budget Howard, flushing – there the large at Just the lands really said was you and expansion. Nevertheless, landed deals year-end, quarter. no – you

little a what you a you large about on expansion into from I sense deals, lot particularly So get guys Obviously more of a about here. the platform to bit are talking some wanted went side. guys those

to big And customer of now are automation, I you like you to multiple of service? million. those over products. you then But one that the the largest paying products think customers talk And my quick now lands, at have, XX% largest was Maybe enterprises? pockets I relative those a the understood about mentioned the I up to on questions. in just of ways customers, ARR a have XX $X Where know you are reps into is which focused Jeremy, Jeremy and getting follow-up. now sales that selling

the in comfortable, apply like enablement automation the able QX, support response runbooks to to In able to dependent infrastructure a and around or compress of about we both AI impact with starting to how to the issues operations, effectively. to terms about or problems and about of customer talking customer automate getting time in more salesforce an services and incident being orchestrate to how more Sure. effectively, and engaging service solutions event think we terms made being get faster increasingly conversation and big incident, leaders push then impact about of understand our really service how the more to of talk work correlation orchestration the comfortable orchestrate, event

from a we where information that and leverage of lives. time And give made business think and reps value purely our the talk assessments into our business productivity data assessments, just so of to them Also, and I customer a to of helping lot about unlock customer effort sense a put enablement we this. headway perspective customers lot

assess one some go said, of just – had incident underestimate I've timeframe then incident. regard. the customers, And back that paid blast closing then compressing we major and over-deliver and delivered have not in and subscription through for we whether we PagerDuty radius last which of that. that or and around upon the many year's Usually

reduce my And budgets to constrained, benefit us to more become so I there's infrastructure a perspective, productivity. unlock coming think become me saying, that help help teams costs, as market constrained, me we from customers have to the also as more

of sort we're demand. So meeting that

last larger are been these thing some that of most think, well of XXXX. super I in customers the and cases XXXX, we've for I described with that's XXXX, reasonably been would have these deals, The say where it, is since prepared us helpful.

grower require see the we're very leaders in broadly. leveraging a said those and basic rise of take of digitization of a understand more you more the of to in at their value And that the they are culturally, customers people then you business more also more our the patient start more seeing that automation historically made sort an companies model each We've make really acceptance that of businesses become incident with technical a seen I've to digital case. greater see partnership, And other a AI they And chair tend automating lot often value response, technical a we're swivel place center. leadership and or where these of always operation around support. to talking use decisions

are of coming those kind together of all trends us. for So

through that year. That's last are companies price our great. short increase Thanks, able Jen. very of to coverage you of a one Appreciate then it. a put was list guys And Howard,

are you maybe guys not the this half quarter. or what think I coming mistaken, first if I'm anniversarying,

way out giving Just your opportunity anything in Here's that also price gone there. guys. deliver? value the aggregate can an the Is you sounds opportunity just about is guys it It and increase us or this to about an right straight greater to it? to like call for in is think Thanks up? it's how well talk PagerDuty platform

Rob. Thanks, Yes.

there few I elements a So to are think that.

timeframe essentially I was think that increase back, customers. year, now, price last March introduced the going in new we a just for So

would was if pricing. you new an purchase, there course, then to to of then the new existing And new were made them if be a annual renewal And provided pricing so customers they was uplift. point, the And subject customers. like, starting for that new

been pricing has received well through the that So year.

customers. change, pricing think point established. and any I now with As a for creates like it well embedded well discussion But it's

reconsolidating that ensure footprint Cloud. of look of more and is their us the PagerDuty for us spend expand what's more to be using be this create us. opportunity that's out interesting really to a able Operations to to the with add customers some as opportunity great for for future there, I of we they're that to we able and portfolio more us and products There's think sitting that's And and as that for the to

Thanks, again, it. guys. Appreciate

out, Tim we're Lee. things from to not that's Suisse, Fred Rounding hear Jausovec, Okay. going Credit I believe

Hi, is on thank you. Fred. my this for Tim Yes, taking Appreciate you questions.

is First reported million revenue At your sequential same the you last slightly I you've QX since what growth $X year. implies your guidance lowest of off, revenue the XXXX. believe which growth, time, above midpoint full-year guidance QX in sequential the implies seen growth revenue sequential

So in? the us a relatively guidance environment given I especially the of healthy through guide, weaker you're full-year was hoping could and you to walk very puts takes QX operating compared a

Sure.

And remember us. last was compare. result as I QX particularly is of to year quarter that, a a strong for compare is the tougher So key thing think the that

we've about that for And our have given views we've macro to the the how out of most about of we just part thinking within of the in tried play We thinking across guidance on early are the recent at in looking that incorporate full-year. the may the the circumstances set full-year, year. also terms

period. So circumstances in revenue as we does the the as move through see the through year, it shift it those the create – a year, play will out we slightly through different

recovery a macro year back clear, be to half environment the the your And of are guidance? in into you the in assuming

So is last versus terms set of the base different right? QX terms…. in different in year, a a or the very say, quarter from QX, year strong which later in of like compares, of compare QX compare was the a It's

No. terms entering assuming execute new given difficult in we're products going the our to macro standpoint ability capacity probably from the is throughout position. the say we're competitive to It's safe our monetize that environment in we in confident we're to to of where year, that but year persist how are

then Jennifer. for Thank a you. And follow-up

the CSM ops you in CS seeing about with over – next see tech customer partnership a evolve announced the pool the do You January. with you in integration tech ServiceNow you're the how years? Could ServiceNow talk tight arena few and

number to seen is mean, help coming a in their as they us their channels. can either leverage think of service both end I through I what cases, learn of that major customers media asking customer customers, Yes. to I it's their out in agents or from many we've reaching information social our teams unfortunately, support how mean, customers. customers customer other from capture incidents about or

also our incidents. engineering identifying customer teams able to this software off customers and products with from support being demand able the that technology help associated closely engineering And root both leverage those services owners engage so on maybe we to agents kick the with but being collaborate and to had and teams, teams, more service to incidents, at of seen problems the

other platforms type certain other, opportunities et And platforms each to or platforms Zendesk, compliment lost to reduce cetera, and of for of but so a help because one are where teams the work, business created like two customer well be you very in the using the there like platform one CSM time us. might sensitive it very product or separate or does. impact what you of the exposed part was also each talk to that work, customers is still that time with system And those need queuing a bringing are ServiceNow, than different that that a platform together maybe a disparate then PagerDuty ticketing was critical, working CRM don't mission manage is, that's you like can see or a we help which unstructured big the part problem what Salesforce, in described

this, them a from driven save need other actually nicely, pull I these each need by strategic lot together. our these I to compliment across there. to there's partnerships, of sit effectively has to just people customers systems workflow need saying, opposed as been time. to so my again, integrate I not And alongside really, where customer work to And the the

point. by Service CSM that on Jen's just validated that next integration piece and ServiceNow point the that special Cloud And and customers been Yes. the had already this who for Zendesk using was to something was done are we Salesforce

end can Excellent. call it over remarks? you to final for and I some the another Okay, of team. questions. reached We've turn Jen,

our a extended a Well, our quarter in can. revenue To automation confident customers PagerDuty, AI operations, a in operations of by profitability in all non-GAAP for recap you plan. Yes, championing our our strong and just round strategy and million recurring in for first a we I'd questions. of ahead am reinforced a in cloud which and our digital the your of achieved say year profitable Have year like world to thank day. our all, of results for team's you out us and recent joining $XXX around innovation for execute. surpassed year you and successful year to great leadership annual growth. in I ability to our fourth today delivering employees Thank