PagerDuty, Inc. (NYSE:PD) Q4 2023 Earnings Call Transcript

So we are seeing good signals in terms of that within this environment, right. So I think in this environment, we’re still seeing customers being cautious, we’re seeing customers being careful about their spending, but certainly high levels of engagement and activity within the customer base.

Andrew Sherman: Excellent. Thank you.

Jennifer Tejada: Thanks, Andrew.

Operator: Thank you. A couple more questions coming in. Next, we’ll go to Rob Oliver with Baird. Rob?

Robert Oliver: Great. Hey, guys. Thanks for taking

Howard Wilson: Hey, Rob.

Robert Oliver: Hey, Howard. Hi, Jen.

Jennifer Tejada: Hi, Rob.

Robert Oliver: Yes. Appreciate your time. Lot of great questions asked so far. But I have a couple. Just €“ so Jen, on the €“ Howard, you had said there was no budget flushing the quarter. Nevertheless, you guys landed some really impressive deals at year-end, some large lands and expansion. So I wanted to get a sense from you guys a little bit more about what went into some of those large deals, particularly on the expansion side. Obviously you guys are talking a lot about platform here. I think up to 50% of ARR now multiple products. But at those largest customers, like the big lands, you have, the 50 customers now paying you over a $1 million. Where are you relative to automation, customer service? And I know you just mentioned Jeremy, that was one of my questions.

Maybe talk about ways in which Jeremy is focused on getting those products now into the pockets and understood of the sales reps that are selling to largest enterprises? And then I have a quick follow-up.

Jennifer Tejada: Sure. In Q4, we made a big push around enablement to get our salesforce more comfortable, being able to talk about both the problems and then how we apply solutions to issues like infrastructure automation or how to automate runbooks to support faster incident response or compress the time and the impact of an incident, how to think about engaging with customer service leaders in terms of the customer service operations, conversation and increasingly getting comfortable about talking about AI in terms of event orchestration and really starting to understand the impact of dependent services and being able to orchestrate, work more effectively, orchestrate event correlation more effectively. And so I think we made a lot of headway just purely from enablement perspective and helping our reps talk to our customers about this.

Also, we put a lot of time and effort into business assessments, business value assessments that leverage customer data and customer information to give them a sense of where the productivity unlock lives. And then we go back around and assess whether or not we delivered upon that. Usually we underestimate and over-deliver in that regard. I’ve had customers, many of which have said, one major incident paid for last year’s PagerDuty subscription and then some just through closing €“ compressing the timeframe and the blast radius of that incident. And so I think there’s also the benefit that from a market perspective, as teams become more constrained, as budgets become more constrained, we have customers coming to us saying, help me to reduce my infrastructure costs, help me to unlock productivity.

So we’re sort of meeting that demand. I think, reasonably well prepared for it, and that’s been super helpful. The last thing I would say is in most of the cases where we’ve described some of these larger deals, these are customers that have been with us since 2013, 2015, 2017. And I’ve always said that we’re sort of a patient grower that our customers often start where they are with a very basic use case. And then you see those businesses become more digital or you see the digitization of their business model take place and they require more partnership, more support. We’ve also seen the rise of more technical leadership at a lot of these companies and technical leaders tend to really understand the value of automating incident response, the value of automation more broadly.