PagerDuty(US:PD)2023-12-01 00:34Financial Data and Key Metrics Changes - PagerDuty reported Q3 revenue of $109 million, reflecting a 15% year-over-year growth, with a non-GAAP operating margin of 14%, an increase of over 1,000 basis points from the previous year [7][42][44] - Annual recurring revenue (ARR) grew 13% year-over-year to $439 million, with a dollar-based net retention rate of 110%, down from 123% a year ago [42][44] - The company ended the quarter with $575 million in cash and cash equivalents, and total deferred revenue was $196 million, up 9% year-over-year [46] Business Line Data and Key Metrics Changes - The enterprise segment was the strongest performer, with dollar-based net retention more than 500 basis points above that of SMB [13] - New customer acquisitions and expansions in enterprise and mid-market were highlighted, with a record-setting win from a long-standing enterprise software customer [11][32] - The number of customers spending over $100,000 in ARR grew to 778, a 10% increase from the previous year [42] Market Data and Key Metrics Changes - International revenue contribution increased to 27% of total revenues, up from 23% in Q3 of the previous year [42] - The total customer count declined by 1% year-over-year to 15,049, indicating uneven demand among SMB and VSB accounts [43] Company Strategy and Development Direction - The company is focused on profitable growth and plans to continue driving margin expansion while positioning for growth acceleration in the next fiscal year [29][51] - PagerDuty is enhancing its enterprise go-to-market strategy by focusing on C-suite buyers and offering flexible multiyear pricing solutions [17][16] - The acquisition of Jeli is expected to enhance the incident management capabilities and overall value proposition of the Operations Cloud [24][108] Management's Comments on Operating Environment and Future Outlook - Management noted that macro volatility continues to pressure budgets and slow customer decision-making, but engagement remains high with nearly one-third of enterprise and mid-market customers expanding [14][66] - The company sees green shoots in enterprise and mid-market stabilization, with a focus on automation and operational efficiency driving demand for the Operations Cloud [37][95] - Management expressed confidence in the long-term relationships with customers and the ability to adapt to the current economic environment [60][96] Other Important Information - PagerDuty was recognized as the AWS Marketplace Partner of the Year for North America, highlighting its innovative business model [27] - The company welcomed Eric Johnson as the new CIO, focusing on IT infrastructure and data management [28] Q&A Session Summary Question: Can you comment on the slowing in the $100,000 customers and pipeline? - Management noted a 10% growth in customers above $100,000, which is slower than previous quarters, but strong expansion growth in enterprise and mid-market is encouraging [61][66] Question: Can you elaborate on the green shoots mentioned? - Management highlighted increased engagement in strategic operations cloud discussions and stabilization in enterprise and mid-market performance [66][68] Question: How is the company adapting to headwinds in seat growth? - Management stated that they are effectively managing pricing and packaging to meet customer needs, despite headwinds in seat growth [71][72] Question: Can you discuss the acquisition of Jeli and its impact? - Management expressed excitement about the acquisition, noting it will enhance incident management capabilities and is culturally aligned with PagerDuty [106][108] Question: What are the expectations for billings growth in Q4? - Management indicated that Q4 is the largest quarter for renewals, and they expect positive contributions from larger multiyear deals [78][80]