PagerDuty(US:PD)2023-06-02 03:00Financial Data and Key Metrics Changes - Revenue for Q1 2024 was $103 million, reflecting a 21% year-over-year growth, in line with guidance [14][120] - Non-GAAP operating margin reached a record 16%, an increase of over 1,800 basis points compared to the previous year [14][120] - Cash from operations was $22 million, representing 21% of revenue, while free cash flow was $21 million, or 20% of revenue [21] Business Line Data and Key Metrics Changes - Free accounts on the platform grew by 65% year-over-year, indicating increased platform usage [4] - Customers spending over $100,000 in annual recurring revenue (ARR) increased by 17% to 764 [14][38] - Total paid customers rose to 15,089, a slight increase from 15,040 in the previous year [38] Market Data and Key Metrics Changes - International revenue contribution increased to 28% of total revenues, up from 24% in Q1 of the previous year [120] - The dollar-based net retention rate (DBNR) was 116%, down from 126% year-over-year [120] Company Strategy and Development Direction - The company is focusing on expanding its Operations Cloud offerings, particularly in AIOps and automation, to meet evolving customer needs [5][9] - Generative AI is seen as a transformative opportunity, expected to expand the total addressable market (TAM) and enhance operational efficiency [7][58] - The company aims to balance growth with profitability, maintaining a focus on innovation and pipeline generation [9][29] Management's Comments on Operating Environment and Future Outlook - Management noted that customer spending behavior has become more cost-constrained, leading to longer sales cycles and smaller deal sizes [15][37] - The company anticipates continued pressure on the small business segment, with expectations of low single-digit growth in total paid customer growth by year-end [27] - Management expressed confidence in the long-term strategy, emphasizing the importance of delivering value to customers [29][66] Other Important Information - The company reported a gross margin of 87%, above the target range of 84% to 86%, driven by infrastructure cost optimization [121] - Total deferred revenue increased by 21% year-over-year to $202 million [22] Q&A Session Summary Question: Can you provide insights on the impact of the AIOps consumption pricing model? - Management indicated that the new pricing model allows for scalability and flexibility, potentially leading to increased customer engagement and growth [44][56] Question: What factors contributed to the lower full-year guidance? - Management noted that macroeconomic conditions deteriorated during Q1, leading to longer deal closures and smaller deal sizes [43][53] Question: How is the transition in revenue leadership affecting the business? - Management reported a smooth transition with no significant disruptions, emphasizing the experience of the new leadership [84] Question: What is the outlook for gross margins and operating expenses? - Management expects gross margins to remain in the target range of 84% to 86% while focusing on improving operating expenses in sales and marketing [91][93]