PagerDuty(PD)2025-05-29 22:02Financial Data and Key Metrics Changes - Revenue for the first quarter was 496 million, reflecting a 7% growth year-over-year [5][20] - Dollar-based net retention was 104%, negatively impacted by higher customer downgrades in the enterprise segment [20] - Gross margin for Q1 was 86%, at the high end of the target range of 84% to 86% [22] - Cash from operations was 29 million, or 24% of revenue [22] Business Line Data and Key Metrics Changes - Significant improvement in net new paid customers, with a total of 15,247 paid customers, adding 127 net new customers, the strongest quarterly acquisition in eight quarters [21] - The commercial segment saw enhancements through a new digital acquisition strategy, leading to improved customer acquisition [5][21] - The enterprise segment is transitioning to a more strategic relationship model, focusing on deeper customer engagement and AI integration [6][8] Market Data and Key Metrics Changes - International revenue increased by 11% year-over-year, contributing 28% of total revenue [20] - The company is actively pursuing FedRAMP moderate authorization to expand its public sector presence, already serving over 700 entities [10] Company Strategy and Development Direction - The company is focused on three key priorities: demonstrating product-market fit for AI offerings, enhancing enterprise engagement to drive retention and expansion, and leveraging automation and AI within operations [17] - A strategic partnership with AWS was strengthened, expanding integration capabilities [9] - The company is evolving its pricing strategy to reduce friction and increase flexibility for customers [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged execution challenges in the enterprise segment but expressed confidence in the transformation efforts and the potential for stronger execution in the second half of the year [38][40] - The macro environment remains uncertain, impacting customer decision-making, but the company is committed to helping customers realize value and efficiencies [62] - The company expects dollar-based net retention to remain between 103% and 105% throughout fiscal 2026 [20] Other Important Information - The company achieved a 90% reduction in scope one and two carbon emissions against the FY23 baseline [16] - A new Chief Customer Officer has been appointed to enhance post-sale engagement and retention strategies [8][63] Q&A Session Summary Question: What is the impact of enterprise pressure on the business? - Management indicated that execution challenges were primarily responsible for the pressure, with a focus on improving customer engagement and sales execution [36][38] Question: How does the full-year guidance reflect the current environment? - The guidance was described as prudent, taking into account organizational transitions and execution challenges faced in Q1 [41][42] Question: What adoption trends are seen in new modules like PagerDuty Advanced? - Early adoption of generative AI solutions is promising, with customers eager to experiment and integrate these offerings into their operations [46][50] Question: Can you elaborate on the enterprise churn and downgrades? - Elevated churn was noted in the SMB segment, while downgrades in the enterprise segment were attributed to mergers and macroeconomic caution [60][62] Question: What are the expectations for net retention rate moving forward? - The company expects net retention to be in the range of 103% to 105%, with opportunities for expansion among existing customers [66][68] Question: How do billings trends reflect underlying business strength? - Trailing twelve-month billings align closely with ARR, providing a clearer picture of business health compared to quarterly fluctuations [71] Question: What is the visibility from large customers regarding multiproduct deals? - Demand for multiproduct platforms remains strong, with a focus on executing transformative deals to capture this demand [107][108]