Chad Bennett: Got it. And then maybe just one in terms of the insight you’ve gleaned, and I know you gave some of it on the call, but just on the headwinds on the renewals and kind of the seat moderation and then maybe a little bit of just scrutiny on spend, I guess, is there any feedback you’ve received — I’m not sure how much you receive on renewals of people just — or enterprises just indicating, hey, maybe we don’t need as many developers on this tool or on this platform as we thought we did. And maybe we can do more with less. Is that part of it or not so much?
Jennifer Tejada: No. That’s — thanks for the question, Chad. That’s not what we’re hearing. And I’m involved in a lot of our large renewals. And in fact, we do have a large customer that decides to like shorten or invest less with us in a renewal. I usually reach out and try and understand what their issues were, and we try and learn from it. And to be clear, when we talk about churn and downgrades, it’s primarily downgrades. It’s primarily customers who are reducing their spend because either their head count has actually declined as a result of the macro environment or their access to funding from a budgeting perspective has actually been significantly constrained. In most cases, and I think Howard has mentioned this in the past, we’ve always encouraged our customers to add seats or add product as they need to.
We’ve never tried to sell ahead of their demand. And in most cases, we see customers adding as soon as they have new budgets available. But PagerDuty absolutely remains essential infrastructure for our customers. And Howard pointed out that in enterprise, our gross retention remains above 90%. Oftentimes, what we’ll see customers do is, they’ll reduce their spend in certain areas but keep their most critical services on PagerDuty. And then over the course of a couple of months or quarters come back to us and start adding some of those services back on. There will always be customers who are price-sensitive and who may fall prey to a less featured lower cost offering. But it’s usually more just about less access to capital cost of money, resources constrained or, in some cases, head count reduction.
Howard Wilson: And I think I’ll just add one thing, Chad, to Jen’s comment to think about because I’ve been involved in a few of these renewal discussions. And I’m not saying that this is the trend across every customer, but we actually find some customers who need more use of a PagerDuty, but they aren’t in a position to actually increase their spend. So what we have attempted to do much like we did in the early days of COVID is we tend to be supportive of our customers. So sometimes we actually have to help them out, whilst they’re going through a tougher economic environment and be supportive so that they can, in fact, rather have more users on the platform rather than less. And that still works positively for us as a company.
If I look at our average revenue per customer has grown up every quarter since we went public. So, we’re continuing to see customers continue to expand with us even if it’s at modest levels. And our view is really about trying to ensure that, particularly for the enterprise and the mid-market that we are providing them what they need to retain them as customers because we know that economic cycles will change and their circumstances and needs will change, and we want to be available.
Tony Righetti: Thank you very much, Chad. Next, we’re going to the representative from Morgan Stanley. We believe that’s Oscar Saavedra.
Oscar Saavedra: Yes. It’s Oscar Saavedra on for Sanjay. Thank you for taking my question and congrats on a good quarter. I want to touch back on the full year revenue guidance. So if I do the math, like it looks like you’ve more than flowed through the beat in the quarter, but also your NRR declined by about 4% sequentially to 110 and now you’re guiding to 106 for 4Q. So I’m just sort of wondering like is that a function of the initial guidance just was super conservative when you cut it down back in Q1? Or are you seeing a better environment than you maybe did back then now and expecting to sign more new logos?
Jennifer Tejada: Howard, if I can jump in, I would say, one, I think we’ve adapted effectively to an environment that’s largely the same, and we’re seeing better results. And that’s what’s driving our confidence. Also, like I said, some of the green shoots that we talked about earlier, the operations cloud value proposition really resonating stabilization in enterprise and mid-market. And a number of — some longer-term initiatives that we’ve had in place taking hold, whether that’s our operating margin improvement efforts or really enabling our sales organization to really sell, to complement our land-and-expand high-velocity motion with a top-down C-level more strategic selling motion. And in fact, we’ve been investing recently in branding and building more awareness around the Operations Cloud and PagerDuty as a platform for action.
And we’re starting to see a benefit as customers really understand that we have far more to offer than simply incident response. Howard, I’ll let you jump in.
Howard Wilson: Yes, sure. And I think I was going to make some of the comments along — our view is really about improving our execution. Our view has always been trying to control it, what we can control. And I think the adjustments that we’ve made over the past two quarters, in particular, have put us in a good place. So when I look at Q4, I think there are a couple of things to keep in mind. We put an increased process on customer acquisition in the mid-market and the enterprise. So that’s an area where we know for the long term, we’re actually going to be able to sustain higher value and higher growth. So, we expect that in Q4, there will be a positive contribution from landing those customers in the mid-market and at the enterprise and at higher values, but it doesn’t contribute positively to dollar-based net retention this year.
