PagerDuty (PD) 3 Sep 242025 Q2 Earnings call transcript

Good afternoon, and thank you for joining us to discuss PagerDuty's Second Quarter Fiscal Year 2025 results. With me on today's call are Jennifer Tejada, PagerDuty's Chairperson and Chief Executive Officer; and Howard Wilson, our Chief Financial Officer.

Before we begin, let me remind everyone that statements made on this call include forward-looking statements based on the environment as we currently see it, would 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, future revenue, operating margins, net income, cash balance and total addressable market, among others, and represent our management's belief and assumptions only as of the date such statements are made, and we undertake no obligation to update these.

During today's call, we will discuss non-GAAP financial measures, which are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. and measures GAAP our available between release. earnings reconciliation non-GAAP is financial in A these factors as SEC. included and the on recently with and information Further other the our including our results make the most differ subsequent Exchange we made Commission, company's Form that to materially as filings are XX-K/A in filed with Securities well financial cause could filings

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

delivered a million. Good X% joining non-GAAP PagerDuty our by afternoon. of X profitability. quarter Thanks $XX us growth range revenue was and to your and the consecutive XX%. at revenue margin range approximately million second for thanks solid We within for patience, operating points guidance increased with above record recurring $XXX eighth This quarter today. our non-GAAP annual

bookings, We supported growth ARR quarter Both well as a XX% XXX% improving net for by results segment. new in as year-on-year quarter-over-quarter. have stabilized at expansion our retention Enterprise especially dollar-based were third consecutive at and

As our and addressing needs I'm segment world companies the the enterprise is digital of strategy. their signals multiproduct the we've and critical with scaling by in quarters, business encouraged market in that Cloud, helping the by the operations a in platform, largest both shared operations. the in modernize Operations PagerDuty recent the validate our

and more greater cross-selling with fact, a $XXX,XXX grew strategy. than In effective than accounts more as value ARR segment executed the XX% we of upselling

multiyear ARR representing the despite During environment. the signed number X/X nearly volatile quarter, we renewal of record agreements, a macro of

our which selling when can scrutiny off. segment, still enterprise experienced focus increased into paying levels we approval While is multiple lengthen sales cycles, the and

segment. major first our net Global in above that of the segment's suffered quarter. effects points the SMB XX retention incidents Enterprise these ended of dollar-based companies XXXX the past When of negative half recovery Many customer day disrupted, impacted team night to service global as world and work and diagnose lost incidents billions labor time. in and around lost teams get the and and IT systems, occur, costing innovation Our development

the systematic wake major broader widespread and if, business year, serve Enterprise increasing A The For growing a a distributed impacts existential market, infrastructure X/X technical events triggers fragility our reminder failures we architecture saw across is that processes challenge are become proliferation not year-over-year. Nearly customer-facing AI technology industries manual all as complexity persist. these and threat we when. is of call. of CI/CD, co-development aging of by recent and exposes question incidence customers mainstream. the this This incidents debt compounded rise leaders see but where that suffering from negative up an XX% generative

to these PagerDuty our technology quickly role contain With and maintained global on disruptions, high platform is platform underscore technology down, incident orchestrate impact. X,XXX% identify disruptions best and a world business to alone, response increasingly and significant on cost recent and We workflows reduce incurring surges. availability, customers issues, outages The rose recent tested without Cloud over automate speed scale. initiated that the Operations we rely the The plays. XX an outages and and the saw outage July When occasion. possible pivotal increase massive global our the day in Fidelity on to

challenges each of similar of to enterprise to a most incidents saw to resiliently that for customer CEO our it's for of us in is and history has resilience PagerDuty's past. resilience protect incident operational moments. Our companies. trust companies Cloud operational and risk imperative, mitigating deliver reliability of vulnerable the the result revenues, cost up-leveled scales the with and experience address we while what their investment innovation why Improving cybersecurity management Operations and these major to of in

best-in-breed incident major and some incidents. we a customers have to in our urgency an be of prepared sense benefit of increased many but Anecdotally, management over a expect early, to demand for for offering choosing It's communicated see preference better renewed time.

regulation, worldwide, data and automation regulation Operations expansions growth X-figure from long-term for and privacy EU to compliance, risk demands Our several a has services financial customers demand support Cloud. subject above controls the overall vertical regions verticals with the X- trend in and also ARR across and driver Dora exemplified increasingly and in mitigate this to XX%. to become requiring are strategic heightened diverse oversight The QX and

in million global incident cloud are by automated through platform Strategic $X our is platform a and The our partnering in based the demonstrate North XXX%. estimated banking of they their AIOps targeting strengthened to expanding power institution journey XX% QX. customizable product automation America a over workflows example, of operations PagerDuty. over ARR, For agreements At in of exceed management, to years and usage incident transition ROI underpinning of by platform. duration this the progress AI like reduction X

automation, including XX% Service Ops contributed AIOps products, and net ARR. premium support the new of new Customer During our quarter,

financial services X-figure strategic QX. grow customers respectively, resilience to Europe protect revenue. their and optimized financial and Australia, Based leaders expansions Operations additional Two of in Cloud X- the for signed scale and and in chose the

efforts. We modernizations their also to and including high closed operations a the with a operations provider workforce AIOps accelerate help large X-figure management service customer expansion, software company

their AIOps. and of On nearly relationship data the and size storage side, coverage management their computer scope manufacturer a company and the hardware instant doubling by drive expanded adding

end-to-end products, within ingestion XXX% The next With real-time expanded environments complex the of cohort of over million our flexible modern the addresses event-driven environments targeting in challenges X $X presented common ARR machine ROI automation, these customers. are an operations years. by like is the set data feature and that customer learning,

enterprise we events leaders awareness and customer to the During hosted Cloud. and global the Operations benefits build quarter, educate technical and also on practitioners the both of X financial

the generally teams PagerDuty equating this was of millions Cloud of embedded we offerings to generative at suite series a GenAI Operations of in highlights the available capabilities hours positive of end the savings. of of which to These dollars the hundreds AI save July. annual One response PagerDuty in enterprise can platform, Advance, made

late in-progress it they've incident response, those integration tight instead offer incident and updating coming Slack leaders of simple information, example, we key happens. an with efficiently responders For to for work keep precious and in can where of wasting prompts both and use summarization time, Teams joined as

the and are Advance in postmortems every time can $XXX,XXX at further AI run life cycle. access. and an tasks also Generative Together, the to while time-consuming approximately anticipate of enterprise incident troubleshooting books actions automating companies PagerDuty minimizing costs progressing work diagnostic suggest early the well forward transformation equip responders, questions accelerate automating a recommended and average incident. digital enterprise impact per AI they generator and at incident steps financial when step

a isolation across also We being able policies integrated the new capabilities deep our this connected released cycle knowledgeable Operations complete This differentiated, past, to instantly. requires well-equipped Using data combination people, workflows. incident offering. such, and and to delivers incidents problem solves the match most incident a of model, on of Cloud, responder correlation dynamic the proprietary knowledge like common events, life not more to the and challenge as

ensure critical urgent a and PagerDuty.org. an to case. of response response focused impact to accelerator people emergency important PagerDuty to prices, cohort third in they and nonprofits through These online PagerDuty impact From announced ideal communities. our their services availability services leverage use perspective, provide services These on support crisis social we are

we business. the PagerDuty's progress and These our volatility gains by we're of the our lower have moderates validate This in positive in made higher strategy market and effects opportunity. Overall, to long-term SMB. reinforce trends enterprise scale growth encouraged our optimism

professional of services the back increase the half we that year, through rates. As attach progress can we remain retention confident net and we dollar-based

From a the proposition with 'XX. in my highs half. ability strong exceed IT agreements, XX% close in FY elevated ARR first ARR following This the in perspective, in reinforces of our and quarterly in growth awareness multiproduct an culminated multiyear value confidence outages, our recent to along

my operations. express our I ongoing revolutionizing dedicated would to for trust employees for for shareholders partners their customers our their support, like commitment our to gratitude and their and to

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

stated, quarter, good U.S. expenses call. GAAP release new and our second was and Jen, consistent solidify in a basis X-figure with all to you, last and to this progress Customers and afternoon's our and on companies the posted results regions. closing business large continued Enterprise, quarter, in to focused the across our X- the the negotiating to with earnings international operating renewals. on the on both we references multiproduct non-GAAP reconciled when that us our Thank call. In joining remain are multiyear before are contracts Unless everyone value and otherwise results day

with whereas deal Our strategic growth a levels of business remains our strengthening high is headwind and SMB enterprise to churn and downgrade. expanding with focus,

half motion. sales growth in make to typical the increasingly ARR our enterprise of strength focused, gives by the of becomes year. the end the The reacceleration seasonality enterprise continue business the rhythms me our pipeline momentum confidence As of back the adjustments and and of to in we the

line Revenue guidance similar our contribution revenues, linearity dollar-based We retention year quarter year-over-year delivered to X% QX range. with despite million. the international million, The onetime remained ago new total exiting within XXX% $XXX Annual in phasing $XXX for the revenue recurring ARR to year-over-year, and of XX% net was net QX engagements, unfavorable XX% service period. up grew our expectations. we from was of

by year-end. for at and to is XXX% DBNR expectation be Our QX XXX% least

up a Customers year grew spending X% XXX, over $XXX,XXX revenue in ago. annual recurring to from

with greater logos $XXX,XXX ARR XXs, the up than first high grew addition, low quarter. teens cohort in In of the from in our in the

departures XX,XXX paid decreased to of XX% and QX customers from an customer increase the to approximately in of segment. the XX,XXX, The compared in decrease last on our compared period. ago year. of to our SMB platform came paid grew bulk Free Total over companies XX,XXX year

to high QX range. our end at XX% of XX% margin was XX% gross target the

expect modestly range gross this our year, will moving of view to FY that margin closer at continue the but midpoint in high our We current is to to until the 'XX. end services remain grow

to of of or million in year. lower QX revenue to million and The to to due was primarily XX% same $XX to was guidance headcount QX. shifting income expenses shifting last compared revenue $XX quarter the from the marketing or outperformance compared XX% commissions half, our second Operating

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

breakeven for from we with quarter during flow received will the quarter. even being cash the near benefit The during up QX, capital free second working

We points full cash flow for of the above year to a be margin. our expect operating free couple

we with million from in to cash and the balance sheet. the ended repurchase Turning QX, $XXX $XXX equivalents investments. We million quarter In shares plan. repurchased million X.X cash, our

through May XXXX. million We $XX have remaining

XX-month to to growth billings With be an increase compared QX, On trailing basis, billings a to XX%. XX $XXX approximately of X% respect year months trading ago. we a were million, anticipate

is XX% expected the At the be end Of million. approximately of recognized QX, total amount, over to was or months. $XXX $XXX RPO XX approximately this next million

performance total to the original As year with $XXX would disclosure reminder, less contracts as months our current a obligations than 'XX. RPO the remaining been ago of period, definition includes XX an Applying term QX have for FY 'XX million. FY of

Turning to our guidance.

million quarter $X.XX $XXX.X For growth representing revenue of And in fiscal margin the to to expect PagerDuty, income XXXX, of in XX%. implies of share $XXX.X of This the X% to X%. million, third attributable net range per to range $X.XX. we operating rate Inc. diluted the a

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

remain and growth The strategic exiting XX% in enterprise along net expand our multi-core $X.XX. PagerDuty, to accelerating back well compares the with success year This committed to a income growth operating ARR half $X.XX for look we're to growing XX%. net in above continuing while the attributable prior positions Our dollar-based contracts $X.XX multiproduct, we us share As pipeline Inc. implies time. we remain of guide customers to to of an confident our with of the strong of retention. to This XX% over improvement operating having XX% and diluted to to rate, $X.XX in we margin year, current per our multiyear margins

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

panelists. you, Thank right. All

question first of Stanley. come Our Sanjit Morgan will from Singh

the theme call, like the guess, At this under down the side. of sounds time, $XX the improving come same I the business seem just underlying million. had to So the fundamentals it guidance be of on enterprise

if it. to Howard wondering, Jen, was want I you So take or

your the can So to it just side, cut sort like revenue with of the acceleration? ARR between and tell seems the stability and guide, you the year on just in us more confidence exiting

your the It's call. And everybody, issue great Thanks, a through question. of beginning a worked Sanjit. thanks, at the patience for technical has

and it's taking you happy hate about I'm I want a timing all, it, walk this. largely I down of to first not So guidance, through issue.

products, bit land expand little driving increased We in QX doing I attached. an was seen the a but of also deals that than that in linearity So that more we're transactional quite professional our more saw seasonality the but we And are strategic in past. it back-end anomaly, in of lag that in thought multi had we're and than less larger results so and -- multiyear business a loaded, and QX and QX, was services expecting QX.

just timing really perspective. it's So a from revenue

be tech in to Having said that, accelerate remind is trends we're stabilize. guidance know with ARR to SMB, Even And yet land reconfirm, in is continues mostly start-up And expect funding to pressure. half. while still to for startups seeing We under that's that the tech our just back that unchanged. us. we improving ARR you, market I'll

out the the is improve year timing issue, given So we're some growth expected taking through DBNR. this as but of ARR to risk is

So ARR for above the year growth or full at XX% -- full the above for year. DBNR and XXX%

And... it. Got

And I to I sorry, and that add think starts like the seeing enterprise would more that, more the reflect -- respects, other Sanjit, as focus enterprise SaaS in companies. seasonality we that the linearity to on many just we're probably

in backdrop prosecute you that -- that better that that Jen, sort of PagerDuty? costly. Understood. into sort or more sort opportunity how when turn better the for growth for how go you translate to inbound the of just getting ultimately current this environment? talk of Is Or these underlying you? would and incidents Is about just something do more

the leaders a outage, they're tech do that ability to in my debt do Yes. saw set precautions July, worldwide budget is for investments advice forced it's our Committee already of of practices, during leaders the we aside us down. go taking. level, level or a at cybersecurity I CEO the how we what make, I infrastructure out for in where to am What here. prioritize incident for that to reaching driving which to response, just higher support, ensure think at in Anecdotally, think, business be need much impact place financial took from to through burn over best what a on and third-party I conversation not realize because Board, log budget when And to Audit prioritized senior will level the in was the get the we've for this seen but way improve major budget time, the

saw took between operations were not very of the customers also processing operations, excess -- and and cost to full in which who get found operations And time the full We the differences time issue and days lost rose. discovered the tertiary back the by manually customers mention Cloud incidents revenue, matured a early who of that that are secondary to huge Sun online have terms adopted in who has back OpEx and labor. their entirely

continue expect we'll budget conversations. strategic we of in where protection Too customer That's anecdotally up these around that and up the it's for to show I deals show early in see see pipeline. that investment more I expect pipeline, up really more so And showing PagerDuty. to seeing. in already see but the more will it And and we're

Next ahead. America. question go of Koji, Bank please will go to

very very, thought I a high some from 'XX process wanted fiscal ask to maybe into -- level.

of continue? implying think And into we seasonality then Just this acceleration billings exit seasonality and more year? next also fourth in growth sorry, of do this the little year, mentioned fiscal rate those the ARR. versus linearity. I'm quarter, type in thinking you should quarter kind half a the about decelerating confidence -- trends of How but about the calendar Jennifer second guidance the bit But

that good Well, that level is Yes. that from doing driven deals more require scrutiny multiyear, of the news some a customer we're is the fact different approval and of seasonality base. by the multiproduct

future, us multiproduct record renewed of And our seeing saw growth. ARR number available a in XX% takes of multiyear we're quarter, large we on this in so to renewed off and of deals the we which multiyear, enables as result, retention a focus pressure also to --

So fundamentally, better us but XXXX. let puts I comment I'll Howard think in a place, on that

Koji. Yes,

but on at the So be yet growth look is we actually we rate 'XX, billings for on at XX% will basis. growth. trailing we we've trading strong about think doing move to some customers FY the the the haven't If multiyear year, it that, a that provided guidance perspective, downgrades above our where ARR with of a made months does retention QX. really churn -- XX-month billings future successive platform XX% you're mark. were at specific will Jen's We out any that looking to is from way that and efforts creates that arrangements number expectation look pick which up it we're, the for think would a if XX be, point, approximately risk of the around And I

ends better would go expect year, emerge that of heavy other on month going is we companies, we will we're next through into see focus And remain. we up like quarter your fundamental to in progress more that likely that weighted. probably to position to would that started the a a And also mean as biggest year, we've that we going seasonality but mean quarter. as enterprise as be the every it being perspective, fourth third the the the from quarter that that's So

let's Blair, go up, JP. Next William to

of different of trying plan today guidance that the those some kind to of issues? Just last start to you takes it there put these understand when perspective, to account seeing? puts you're deals of if expectations guidance the out the and some close is about kind quarter an as or SMB relates anything large of to that different from kind Just into for you're churn versus putting there's

led ability Yes, revenue gets is a these had with are the as this the the professional million of that year, down deals taking lag of I this delayed, that within look Jake. can happening. recognized QX. to out half led guidance means some one and I'd in element year. to at is services change the change couple say cycles break we now less it seeing later, and that is this sales phasing first we're happening bit, we that's that even in in in little When linearity of longer being dollars a attached, a to which of some that deliver It our QX

And again, not towards the third again, But QX. of so be, saw will year. we've that but then look going in we in And at tuned QX. QX that weighting that expect a quarter, is it we're and to enormously a for ARR as half, to that net that than will with the the complexion month quarter in But we half. full probably out bigger have a a certainly similar back of of be new bigger expecting so, there terms QX, the more when QX, we back weighting

add that, half. deliver Jake, Yes. in do And to pipeline we I'd just to back the good to have the place very visibility

our improving we've strategic larger, with think these used cycles more in I to them. as gotten sales visibility is deals

organization start or Customer we've down, expand, and the area year-on-year. led have done know, the very enablement you growing really surface year-on-year XX% land strong the expand XX% growing quarters. versus response, for evolving multiproduct, to as there quarter our many adding over also, over Service starting outbound to around incident see new XX% The with success Ops over start top all and the about multiyear a products. we're of then platform AIOps, bottoms-up a has We and behind execution been And go-to-market

North some of improvements markets place addition federal. to renewals. in churn having some So And the now leaders and largest and and in in in around we're evolution both seeing they new American more where enterprise of that in hitting that's ground running are our EMEA in driving in productivity these

towards cadence in growth back spending bit feeling the also of So XX%. quite I just stronger a like but with, customer of confidence segment, the we're our as value a like was $XX,XXX pipeline, the large of year look in coming half from over deals, that seeing more said, the foundation than

time, less total enterprise. see to momentum there and in continue represents So over less ARR. And SMB of the that

would a in top since When of increase sounds year, really thinking Yes, understand start helpful. And been the Is pipeline early to you about layering a of outage, kind good just first expect traction? interesting Okay. It straight actually of back very the kind activity X,XXX% incidents -- about how -- love there's given half I the into of it's comment funnel half like days. that just that year, those crowd and of the some still then but next you're that next to business? of during just early quarter. kind would

major pipeline the see in last We're not trends customer I we'll buying. would in understands one result approval just a of we've what then we incident in in processes in new And it see a average, $XXX,XXX breadth modeling What seen will that seen is conversations, on quarter a cost the what of the incidents. of incident. first, and really when major of it customers an as terms is already of we've the are anticipate

becomes like and financial business $XXX,XXX, incident value. the by is and customer that compress half, customer real can that duration you If end --

often leadership get So champions that, a multiproduct understands move can the our faster to multi-deal done. the faster

the I awareness. seen So already just tailwind we've think, is biggest, that

to Just later. happen you're orchestrate detect now in spades major when automate and CEOs to platforms and pay response incidents it CFOs because having will, infrastructure really really going if the on understanding for you and that these they

to And in mindset. how I see to terms so going in after that's of I ads. sort long-term we'll can't it is -- that we But it and more to that manifest see I predict long-term sales of think investment that short-term long then cycles, expect going to And thinking investment to take start manifest.

their long recovering incident of on use for and has case quickly an from a take our PagerDuty, the like this. a back longer to of move some customers been Coming our customers transform -- really of thinking primary Some internally. major issue

ahead. The next will question Andrew, go Cowen. from please come TD

flexible We'd tracking? helped customers? is deals? Has love the second you are to enterprise in this feedback pricing hear half to any this with help from expecting in drive quarter? expansions What the from those What the is

the Feedback deals prepared shared positive, to I of it's some we has some that been in remarks. some get big very and call. know really the enabled people time into

American Service talked about industry is means, incidence users, price the like the North tag or of now bank as data coming do heightened you?" customer understand customer kind beyond was a Ops. that Customer that's it's and response, many talked service, that of financial less and under and saying, regulation well this about And we we the to So around regulation and in genesis already that and regulation We've privacy as that services a is we global AIOps this about value those is Dora increasingly X-figure for it's to expanded the leadership emerging global the "Look, of doing around nature of diverse leading this. just users. incident EU, evolving -- How us changing. with expand And that's

I Our quarter pricing. AIOps about XX% said, business, grew consumption-based this which, like

that flexibility services. products going their a add we're to getting, are terms in and want there? I reception adoption anything Howard, to warm about how thinking to across that, of So think, customers you also grow

covered I Jen. think it, you've

the expectation? are you've the versus your that renewals as longer more you're then taking your deals as far how weighted well tracked But And factored for understand QX QX? I then assumption as Howard, changed larger and in you these close? all have I close to get rates think now. And Okay. fact -- anything that And on have the how we

Yes, sure.

reason a closing our their our account to deals guidance that the guidance history deals why into And seeing of also these end longer. from up part of the So terms timing. taking was anticipating and these perspective, recent how may because took some made the are adjustment we we of most in

terms within the we're So being closed our pipeline team really over disciplines these put we're a managing been sales those the of certainly deals and in have to around taking the and deals. about timing for. sales place the year. lot that's of being in scrutiny improving approach past been That is said, And incented the we how our that of that quality level of year within get accounted this the

improving as that's So about think we of confidence it. our level

deals QX we into and in are into next and QX that play, both So have the in visibility year. good

from like we the year, a it actually perspective, when year at in in started last to initiative Fundamentally, renewals multiyear renewal, QX of a customers it arrangements ago about earnest just not earnest results than it starting a to it's at when year, we onto was get new this renew did deal. And year. last was that's of bear QX in QX was that a less within available we to look what's in lot what

more position risk on potential to the effectively. So that manage side retention a in we're that any means

please. up, Next Craig-Hallum,

to will go Van Rhee. Jeffrey We

of questions is guide me. this the make reduced by couple $X sure to back just at read to midpoint want for million. A I the

of think that I caught I million. you couple think, if Howard, PS it, mentioned, you is a

get years happen seeing of loaded. You cycles later going and factors. just and back-end mentioned seasonality and put, year. the back back? Is the to simply that to going you're But more just read But to we're other a longer a in bunch fair same

That correct. is

year. would new exception end ARR we above in the XX% specifically that's the rate With expectation to the net will of the related, that by in get terms book of professional to services us growth of the is what our still expect terms of revenue

Got it.

you incremental you proposition. about that the a incident some of Jennifer, now management, competitive rate, from incident talked what the ago? Okay. management, going at But like when when a an a are attach And much deals then look rates just just in win broader look you're I rate do to versus with realize year you're products.

But part obviously. We the our haven't of meaningfully. hasn't changed that win published rates, market

seen customers more seeing are headcount that we those in the in some extent, to mid-market. like past. also we've lower the aren't growth. also price level think market, end is they of sensitive the I the in that compared to And of SMB, some segments but particularly

detection is, a pressure large some a on both responding with not like from But effectively. that need And correlating it's companies a stand-alone processes XX observability in lot what out management players XX, puts even renewals. the what like very July manual and one works I major support that and standpoint, incident platform more outage zero-sum still there competitive use a more that happened our growth have little favor of are a and offering So you as that just saw than that information, of market. there a on to thing are that in have automation get not right, even that think

incident then even foundation themselves an on around would anything different that built more say else on is automation the out distinctly and we response, in platform I is our the on data mentioned events that's and incident that that features I a have there And to the coming more based set the including also prepared generative proprietary management data then in, AI-based workflows and remarks. that AI also

to disruption running the are isn't July there said, on the and attest player, rest surge. that largest cost world world of increase when a pressure the think, that the that alerting workflows think is I management major the that another suffered and a can, companies saw, the interesting suffering observability -- I was event the notifications kind incident is outage. And XX,XXX% of in we live really of things and One about of I platform no incident no like

support and changes the thing end those. at this free even sensitive, at under is of say our mid-market global try to price scale that pricing. the somewhat back. and the taken would is made But tough security to even We've controllables. are worldwide have that the of So some The in -- significant I and steps one I platform, to think industry outage more outage. of the am a -- an there a come macro, of and tech will we're getting like customers I SMB optimist day, think that And controlling reinforces we resilience last I our

our in not continue. time. in just expect continue expectations. conditions back We will SMB that current venture start that the to we see Like to for some funding to at in I'm point calling

it my Sorry, [indiscernible] going to to X,XXX%, XX,XXX% do was Jen, and I'm CFO, not thing a have said

fantastic. impressive. pretty sounds XX,XXX It is

appropriate you. number. the use Thank Let's

could sneak last One me, if SMB in on the I it for side.

customer was bottom pretty was know on reading I'm you feels side, enterprise of SMB, SMB correctly, and stability versus just clarifications. on I'm more you message two trends there's there. little to SMB. SMB overall there's numbers And more prior granularity different number, enterprise? the the The be and count feels of some maybe customer slightly I'm longer within it tell if clear, can the in wrong count on a pessimistic a it if it just on me, of to little more quarter a I then Just versus give the but Howard, down, me but

Yes.

had So there SMB has remained. elevated quarters We've now X downgrade row. churn in for and a

consecutive fact, the quarter year-over-year. of fourth that contracting it's In

see from of like that stabilization a it's been headwind level so quickly, perspective. terms And right, quarter is signs one We in some I of to fairly movement. that stabilization say but would of or from elements the reverse can a next, then real What growth. to

Now from actually of by of actually in the far, customer that is are small. accounts that year-over-year. outside is count that a Again, bulk number customer SMB went of perspective, SMB churn relatively count churn down our the

more more and mid-market enterprise us So on this landing important. is is enterprise also focusing the goes where part of

see not so we the to of the churn. if that specifically within expect And in higher given you that like, means SMB us, for volatility, market levels general, do

we'll to Kingsley. go and Next, Canaccord Genuity,

seen I competitors to and reintroduced want return bells new of and their a some some to So We've whistles. with of larger combined products competitors bit a your couple smaller competition. just little

more you want about hear And So evolved? the how about has just SMB environment affecting relative then how specifically, enterprise more competitive relative strength think to softness? versus I that to

of are that seen there not a say most Most would the out price-led offerings for again, in area is I as I zero-sum that in does matter. think future. competitive the if this quarter us will outages what in versus serve worldwide anything, I that feature And the led. driver And below Yes. purely of the that because don't we see effectively market. enterprise scale is in And or that the a our mid-market into with last is -- competition or competitive the we've where think is performance SMB. an

little throughout have The is and very much supported functionality, which platforms our that less in not other AI focus. are their out very enterprise, are players proven there clearly

increasingly, I the -- to AI take AI of and And the of that but detection an not perspective. that from incidents on traditional platform, as them Cloud those terms confident grade I rate faster both hold, to players resolution more basis. these so of large of to seeing going and feel of actual orchestration automation troubleshooting of right continue in also agents we more global and Operations in the think we're And just just are more generative and enterprise and believe diagnostic that and intelligent teams compresses help correlation the delivering the incidents, outpace other with the we're AI to and R&D events starts the a

one Great. Howard. Really helpful. And then for

the in over really strides year. You've made past expense efficiency

long-term has a XX% to was margin would profile model. that terminal your I you close since put your The margin. You're attractive And an have plus out. business changed gross could that say suggests lot

helpful. So Europe efficiencies you would more just any thoughts from find could more on be

Yes.

the for question, thanks So Kingsley.

these we've know, location taken and terms our think our structural of this. strategy, a use contribute programmatic in our both improving use to of good internal all to and our of And as we that about you a things AI, productivity technology, for foundations efficiency company. approach really laid As how of our we've always

of So I see the think same. you'd can what expect to expect more you

the our more and areas team. those we to have we can into and that at how And those made gen, efficiency more raise drive how time, investments. drive we look efficiently efficiently on marketing demand continue already and leveraging sales our brand can sales So at on same side, the

the R&D perspective, opportunity sales goal G&A high marketing. is our strategy. an the R&D of around think obviously, where our from have term, and support the maintain to for is still investment then longer in I obvious and And then most areas So levels innovation we where and to try

And final John question comes our Scotiabank, from

for Gomes is This John on Altmann. Nick

be enterprise customers. talk lot macro a you can larger on longer, about deals, that's focus taking there when the So driving in there deals

cycles has what biggest the been relative driver are feeling guys here? you the to So how And overall prior sales quarters? about

the the larger long-term genders feel which partnership flexible represent sales is good multiproduct, mind deals cycles. in also, taking I actually the think, pricing, about more and are I actually relationship much longer deal like I because average that a don't which a stickier, they customers. with little bit size,

very the of a change kind this in and the small it's I growth transition more of day, taking in doing longer of of long-term linearity as term, the business. good we customers it's said, more highly the is at end the So deals. foundational investment seasonality. strength less because tailwind and in a a our And more multiyear are to little the referenceable because revenue guidance like really But long seeing about timing and

good of think the the base half the is I accelerate ARR net our through long for shifts very change customers that's retention. to good for the and we end And guidance and but enterprise, confident ability are also the conservatism, to articulating So full of really year back at shareholders derisking more as term. the and about year that more some focus and in business on year $XXX

that's So hope helpful. I

And helpful. ARR stabilize? should talk you underlying we Just for would about for the can we challenged. continue mix the the when be But color SMB expect been anticipated from Super on Or that AR to look any at obviously, ARR, Should half to has that SMB? the super second helpful. downtick? assumptions

Howard, you're

growth enterprise segments. the bulk to of from the expecting our mid-market be and We're coming

that being have some back of We half. a bit even expect stabilization. the headwind see still the negative, we've We as around trends SMB a being seen we -- to in whilst see that

Okay.

to comments. go Please back turn for closing Let's over Jen. management ahead, it

first start And thank you response. to as late a terrific all got it. all, today. the you and I incidents glitches. Well, happen patience to that proof off we for for It of Thank technical bit everywhere. a a time appreciate you team little joining some of all incident my your for these with thank us

record outages numbers The recognition IT proposition ARR the ability multiproduct year. value increased growth underpins really in and our coupled with surpass our fiscal the confidence the to multiyear of of recent XX% for agreements, following high-profile my

most As Howard to focus on to customers. and we're continue long-term relationships continue work trust all, going efficiency said, building improving of on to our and with

your much for time, great very thank rest So your have and you a of day.

very you With that, much. our Thank call concludes.