The Operations Cloud platform resonates with executives due to its proven ability to reduce operational expenses, protect revenue, mitigate risk, all while improving innovation velocity. Developers remain at the forefront of both the customer experience and operational resilience. Our customers continue to face pressure to grow margins while also accelerating time to market in the face of an ongoing skill shortage. And developers confront the challenge of doing more with less, yet managing increasingly fragile tech stacks. Not surprisingly, operational complexity is rising and automation and generative AI are becoming core to operating the speed at scale. We expect developer experience and efficiency to continue to be critical to business success for the world’s most important brands, remaining a long-term tailwind for PagerDuty as we set the standard for developer best practices inherent in our platform.
Our leadership position continues to be validated and reinforced by industry analysts. Earlier this year, Forrester and GigaOm named PagerDuty AIOps a leader in their Wave and Radar reports in the fast-growing AIOps market. In Q4, GigaOm also named PagerDuty the Overall Leader in their Radar Evolution — Evaluation of Incident Management Platforms. Additionally, Gartner highlighted the PagerDuty Operations Cloud in a new market category in their Market Guide for Artificial Intelligence Applications in IT Service Management. Lastly, our Process Automation offering is consistently ranked number one overall by users on G2 in their workload automation category and grid report. Investing and supporting our communities through social impact programs is a mainstay in our culture and FY ’24 was no different.
PagerDuty.org made more than $1 million in grants to impact partners, including our partners in the time-critical health space. These impact partners leverage PagerDuty’s platform to advance their operations to drive improved health outcomes within their community. Additionally, almost 100% of our employees volunteered or donated to a cause last year, representing a third consecutive year of greater than 90% participation. While the volatile economic environment was challenging during FY ’24, we have emerged stronger, more profitable, and well posed — poised for accelerating growth during FY ’25. Our confidence is founded in improving leading indicators like large-deal pipeline and conversion rates, stabilizing customer retention in mid-market and enterprise, an increased mix of multi-product, multi-year adds and expansion, and improved sales productivity.
Our cost structure enables continued growth in both profitability and cash flow, reinforcing our position as a durable, profitable growth business. In my daily engagements with our largest customers, I see increased budget certainty and confidence in more strategic long-term investments in our platform. If we learn nothing else this year, we must anticipate the unexpected and our customers’ demand for our integrated platform, combining Automations, AIOps, Incident Management, and Customer Operations is increasing. With that, I’ll turn the call to Howard, and I look forward to your questions.
Howard Wilson: Thank you, Jen, and good day to everyone joining us on this afternoon’s call. Unless otherwise stated, all references to our expenses and operating results are on a non-GAAP basis and are reconciled to our GAAP results in the earnings release that was posted before the call. Our enterprise motion continued to show strength in the fourth quarter. Customer commitments lengthened across our base as our go-to market team leverage flexible enterprise pricing and increased attached rates of AIOps and our other products. These efforts resulted in our best quarter of new and expansion ARR in Q4 for the year. Companies with less than $50 million in revenue, our SMB segment accounted for 16% of ARR at the end of FY ’24, while a relatively small mix of our business, a decline in net new customers and dollar-based net retention was a headwind to both quarterly and annual results this fiscal year.
This adverse trend persisted in the fourth quarter, but we believe the headwind will be less severe in FY ’25. Revenue was $111 million in the fourth quarter, up 10% year-over-year. The contribution from international was 28% of total revenues, an increase from 24% compared to FY ’23. Annual recurring revenue exiting Q4 grew 10% year-over-year to $452 million. We delivered 107% dollar-based net retention, 1 point above our expectation in Q4 and compares to 120% in the same period one year ago. Our DBNR expectation for Q1 is approximately 106% and is expected to mark the floor for this metric, moving higher in the second half of FY ’25. Customers spending over $100,000 in annual recurring revenue grew to 804, up 7% from a year ago. Total customer count of 15,039 declined year-over-year by 1%, primarily due to the challenging environment for subscale businesses.
Free and paid customers on our platform grew to over 28,000, an increase of approximately 17% compared to Q4 of last year. In terms of metrics that we provide on an annual basis, customers with ARR over $1 million increased to 58, up 16% compared to Q4 of last year. ARR from customers using two or more paid products was 62%, up from 58% in FY ’23. And to provide additional transparency on product mix, the ARR contribution from incident management was 73% of the total compared to 77% in FY ’23, as customers adopt multiple products in our Operations Cloud platform. Q4 gross margin was 85% and within our 84% to 86% target range. Operating income was $11 million, or 10% of revenue compared to $6 million, or 6% of revenue in the same quarter last year.
In terms of cash flow for the quarter, cash from operations was $22 million, or 20% of revenue, and free cash flow was $20 million, or 18% of revenue. For the full fiscal year, revenue was $431 million, up 16% year-over-year; gross margin was 86%, up slightly year-over-year; operating income was $56 million, or 13% of revenue compared to $3 million, or 1% of revenue a year ago. Operating cash flow was $72 million compared to $17 million a year ago. Free cash flow was $64 million compared to $9 million in fiscal 2023. And headcount increased to 1,182, up 1% year-over-year. Turning to the balance sheet, we ended the quarter with $571 million in cash, cash equivalents and investments. On a trailing-12 months basis, billings were $450 million, an increase of 10% compared to a year ago and in line with our estimate.
