PagerDuty, Inc.

Good afternoon. My name is Khaleed, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Page Your Duty Second Quarter 2020 Earnings Call. Our lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I will now turn the conference over to Stacey Feiderman. Please go ahead.

Good afternoon, and thank you for joining us on today's conference call to discuss PagerDuty's second quarter financial results. With me on today's call are Jennifer Tejada, PagerDuty's chairperson and chief executive officer, and Howard Wilson, the company's chief financial officer. Statements made on this call include forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance or achievements, Thank you for joining us today. and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their closest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance. All of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation between GAAP and non-GAAP financial measures is available in our earnings release. Further information on these and other factors that could affect the company's financial results are included in filings we make with the Securities and Exchange Commission from time to time, including the section titled Risk Factors. and the company's most recent quarterly Form 10-Q previously filed with the SEC. Now, I'd like to turn the call over to our CEO, Jennifer Tejada. Jennifer?

Thank you, Stacey, and thank you, everyone, for joining us this afternoon for our second quarter earnings call. I'm pleased to welcome Stacey Feinerman, our new VP of Investor Relations, to the PagerDuty team. Great to have you here, Stacey. Q2 was another strong quarter, demonstrating our leadership in the rapidly growing category we pioneered, digital operations management. It was our first $40 million revenue quarter, driven by our multiple engines for growth, new customers, new users, new product adoption, and international expansion. Revenue grew 45% year-over-year, with continued broad demand across industries, verticals, and geography. We closed the quarter with 12,045 total customers, adding 365 net new customers. Q2 was also a record quarter for expansion of customers spending over $100,000, increasing by 32, totaling 274. This represents an increase of 51% year-over-year, further validating our success in enterprise and mid-market segments. We grew efficiently, sustaining best-in-class, non-gap gross margins of 86%. Our success is tied directly to the success of our users and our customers, and we appreciate and respect the trust they place in our team and in PagerDuty. During the quarter, we saw robust demand for our platform, as well as strong adoption of our new products, event intelligence, modern incident response, visibility, and analytics. Demand is driven by a number of macro trends, three of which I will focus on today. First, the amount of time a consumer will wait when a brand experience is not perfect is shrinking to less than three seconds. Second, digital transformation comes with the challenges of proliferation of technology, apps, and signals stemming from cloud computing, distributed architectures, and IT modernization. This creates hugely complex technology ecosystems that need to be managed to deliver on customers' expectations. And third, the developer-influenced modern workforce requires intuitive apps that work together seamlessly, scalably, and securely, and support employees' needs in today's dynamic, real-time environment. Traditional incident management solutions don't address the challenges that come with these trends. Many were designed prior to cloud computing in a time of sequential command and control workflows. They often require manual integration, heavy investment to deploy, and can't support today's agile work environment. PagerDuty is different. Our platform is designed for digital disruptors as well as the world's largest enterprises. It was architected for real-time, cross-functional work and delivers proven resiliency at scale. Ten years ago, we made a big bet that DevOps methodology would become mainstream. and created a cloud-native on-call management solution for DevOps teams. Our bet paid off as software engineers voted with their credit cards. Today, our on-call solution is the entry point for our platform, which is now enhanced with automation, machine learning, and intelligence, substantially separating it from other solutions. When customers add enhanced products on top of the PageDuty platform, they gain significant value by shifting from basic coordination of on-call rotations the proactive and automated orchestration, incident management, and real-time operations management. Automation is a key focus area in our new products. A public mobile payments company with a point-of-sale solution used by millions of businesses uses PageDuty's platform across all of its engineering teams. This quarter, the company added event intelligence, which combines machine and human response data using machine learning to intelligently group alerts and automatically route them to the right team. As a result, the customer has reduced incidents by 42%, saving hours of unplanned work, improving customer experience, protecting revenue, and reducing operational costs. IG Group, a global fintech leader in derivatives, also adopted event intelligence this quarter, reducing their alerts by 58% and thereby reducing the number of disturbances to employees. We estimate their projected annual savings to be over $500,000. We recently commissioned our first real-time work study, which revealed that 51% of executives and employees find out about incidents from customers themselves when they complain or tweet about a bad experience. This causes hours of unplanned, stressful work as multiple teams scramble in silos to address each incident. Our modern incident response solution addresses these problems by automatically detecting issues and intelligently orchestrating cross-functional team response helping teams to ensure a better customer experience. IHS Market is a $26 billion public global information company providing data, insight, and software principally across three major industries, energy and natural resources, financial services, and transportation. This quarter, IHS Market replaced a point solution that did not scale effectively with PagerDuty's platform. The company is deploying our platform and modern incident response across nearly 1,000 users. It's also important that companies can determine the business impact of unplanned work and customer impacting incidents on their bottom line. According to our survey, the cost of unplanned work is increasing, and 86% state that this results in less time to innovate. Teams face burnout, lost productivity, and less development time, which in turn impacts competitiveness and creates brand risk. Often companies cannot understand the real-time business impact of incidents. Our visibility products Translates the immediate impact of incidents like outages and disruptions into business outcomes. No other product on the market consolidates a real-time, holistic view of operations and correlates people, technology services, and business impact in the moments that matter. PagerDuty Analytics provides operational scorecards and customizable dashboards, so companies can apply a proactive approach to managing digital operations based on how teams have historically responded to major issues. The scorecards provide a curated approach to improve team health, technology service health, and business outcomes like total cost of incidents, response cost to the business, and predictive people metrics to detect responder fatigue. This is an industry first and a significant differentiator for PagerDuty. We are excited by the broad applicability of PagerDuty's platforms. This quarter, we discovered a number of new use cases where our customers have applied our platform. A late-stage, high-growth fintech company that facilitates digital payments for millions of businesses worldwide uses PagerDuty across many of its teams. Having started with developers, they then expanded their users to legal, security, and payment operations teams. The payment operations teams use PagerDuty to coordinate with global banking partners in real time, ensuring successful transactions. Physical security teams are on PagerDuty for real-time response to physical security issues. Legal teams manage time-sensitive requests from law enforcement, and SecOps teams are on PagerDuty to monitor security risks and ensure compliance. A global recognized leader in GPS navigation and wireless devices uses PagerDuty to monitor its emergency communication devices, where complete reliability is a life-or-death matter. The company previously used a basic monitoring service and switched to PagerDuty due to reliability concerns. After recognizing improved reliability, scale, and value PagerDuty provides, the company has now expanded its use of PagerDuty to its digital transformation initiative. Another notable new use case led by our PagerDuty.org initiative was Code for America, a nonprofit that focuses on reforming government services to make them simple, easy to use, and accessible to all Americans. They are currently using PagerDuty to support their GetCalFresh program, which improves access to the Supplemental Nutrition Assistance Program, or SNAP, more commonly known as Food Stamp. GetCalFresh has digitized and streamlined the process for applying for SNAP, reducing the application time from 82% from 45 minutes to 8 minutes and has helped over 1 million Californians gain access to Food Stamp. From a product perspective, this quarter we launched a number of new capabilities that help our customers more quickly and accurately respond to issues and opportunities that impact revenue brands and customer experience. In July, we launched Business Response, which advances traditional status page capabilities so responders can seamlessly update business stakeholders on business service impact and real-time recovery progress in an intuitive, fully automated way. This allows responders to drive faster resolution and enable stakeholders to proactively manage customers' needs. Similarly, in Q2, we enhanced our search capabilities to provide improved context for IT and DevOps teams so they can more easily navigate large organizations to find the right subject matter experts, teams, and escalation policies during an incident and respond faster in the moments that matter. The further build on our market leadership, we continue to deepen our leadership bench. During the quarter, we appointed a new CMO, Julie Herendy. Julie comes to PagerDuty having led large marketing teams at companies including Uber, Dropbox, Yahoo, and Lookout, and now leads our efforts to scale our brand and continue to build our demand generation and growth marketing. As we expand our business, we will continue to invest proactively in leadership to support our growth. In the coming quarters, we anticipate adding a Chief People Officer and a Chief Revenue Officer. Overall, we have another strong quarter, and I'm proud of what our team has accomplished to benefit our users, customers, and partners. We are encouraged by our continued strength in enterprise and rapid adoption of add-on products. We continue to see growth in expansion, geographies, new use cases, and new products aided by our self-serve and high-velocity sales motion. Finally, I'd like to highlight our fourth annual User Conference Summit, which takes place on September 23rd through the 25th, where we will be hosting over 1,000 developers and technology executives. We are excited to host industry leaders, including Jeff Lawson from Twilio, Eric Yon of Zoom, Cynthia Stoddard of Adobe, and investor Andre Iguodala, as well as breakout sessions led by leaders and practitioners innovating with the PagerDuty platforms. We look forward to an action-packed week with our community, including new product innovation and best practices we can all learn from. With that, I'd now like to turn the call over to our CFO, Howard, who will walk through the financial results. Howard?