PagerDuty, Inc.

Good afternoon. My name is Chantelle, and I'll be your conference operator today. At this time, I would like to welcome everyone to the PagerDuty fourth quarter 2020 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. You will need to press star 1 on your today's conference is being recorded. If you require any further assistance, I will now turn the conference over to Stacey Feinerman, Vice President, Investor Relations. Please go ahead.

And thank you for joining us on today's conference call to discuss PagerDuty's 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. I would also like to mention that we are joining you remotely today from our home offices. I have been informed from our conference call provider that there have been some technical difficulties with the increased Internet use. We apologize for any difficulties, and if there is any clarification needed, please reach out to us at investor at pagerduty.com. Statements made on this call include forward-looking statements. Forward-looking statements involve known and unknown risk and uncertainties that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. Forward-looking statements represent our management's belief and assumption only as of the date such statements are made, and we undertake no obligation to update these forward-looking statements. In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to 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 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 in the company's most recently filed 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. We are all living and working in an unprecedented environment as we confront the evolving global impact of the COVID-19 pandemic. We hope you are all safe and well and appreciate you being on the call today. At Patriot Duty, we've undertaken a number of measures to manage effectively through this, especially as it relates to protecting our people, engaging our customers, and supporting them as they respond to the people, economic, and business impacts, and also doing what we can to support our communities as slow the spread of the virus. On March 10th, we enacted a mandatory work-from-home policy alongside travel and event restrictions already in place, and we have enacted a crisis governance operating framework. Given we design products for unsigned work and infinite response, we were well prepared to a great extent for remote distributed work such that we are able to focus on helping our customers as many of them transition to work from home. As developer and operations teams shift to distributed working, we have seen some interest in leveraging pay-per-duty to ensure ongoing digital performance and uptime. In addition to sharing best practices with our community, we've kicked off several philanthropic initiatives through our social impact program, PagerDuty.org. Today, we are announcing that we are providing 20 free platform team licenses to healthcare companies to aid them in managing surge in their digital environments and supporting them and their crisis response teams. The last few days have been extraordinary, culminating this week in metro area lockdowns, federal travel bans, and record-setting market disruption. It's too early in the cycle to have clarity on the true medium and long-term impact of the fluid macro environment. This makes it increasingly difficult to forecast the market and the subsequent impact on our business. This is a situation that's changing some early indicators of changing demand signals. We see nothing material to date. While our business concentration outside of software and tech, which represents a third of our revenue, We have a meaningful business in retail, e-commerce, and financial services. Additionally, we cannot measure or ignore the potential for disruption or market productivity decline that may come from ongoing mandatory work-from-home policies, school and business closures, and illness. We remain unwavering in our mission to help companies manage their digital operations more effectively. Thank you for joining us. to manage mission-critical, unplanned work now more than ever. We've recently seen examples of customers self-serving licenses to expand new teams rapidly, but it's too early to tell whether this is material or coincidental. What we do know is our customers trust us and value the efficiency, cost savings, and customer experience assurance we help them achieve. Turning to the quarter, we are proud of our strong year-end results, with Q4 revenue increasing 36% year-over-year and full-year revenue growing 41% over fiscal 2019. We recently achieved a major milestone surpassing 500,000 users on our platform with our average revenue per user increasing again this year for the third consecutive year. This underscores both the value that PagerDuty delivers to users and the successful adoption of our platform by customers of all sizes across verticals and geographies. Cloud adoption, the need to manage increasing complexity, Mainstream DevOps adoption and progressing digital transformation continued to create tailwinds for us in fiscal 2020 as we extended our lead in digital operations management. As trust is increasingly a valuable currency for consumers, PayDuty helps our customers establish and sustain trust with their customers. During the year, we also saw a meaningful uptake of our new products. As a reminder, these include modern incident response to orchestrate real-time work across distributed teams, our AIOps solution event intelligence, visibility for situational awareness, and our advanced analytics solution for optimizing operational and team health and productivity. Demand for all of our new products was particularly as they leverage unique data, automation, and learning from our platform. Of the top 100 new customers we partnered with in fiscal 2020, 68 of them subscribed to more than one product. In Q4, we're in our competitive modes. We deployed new market-first features in our service directory, a signal by which accelerates full-service ownership across teams. This includes new information objects like current service ownership, service-specific incident history, event rules, and new runbooks. We released the latest version of our Salesforce integration, opening up several new use cases by enabling Salesforce customers to go beyond connecting PagerDuty to Salesforce Marketing Cloud, Commerce Cloud, Quip, and more. We also released new enhancements to make real-time workflows more customizable and flexible for various teams and operating models. These enhancements address the challenges of hybrid ops environments where companies have both centralized IT teams and DevOps. This allows DevOps teams to leverage Agile for distributed work and some centralized IT apps teams all on the PagerDuty platform. This is a new feature that's particularly relevant. This response allows stakeholders like leaders and senior management to receive context on the health of business services in real time in an easy-to-use app on their mobile device. We launched this functionality in July and have already seen 60% of eligible customers use this feature set. In Q4, we continued to make progress in enterprise while also serving the world's most innovative companies. We landed or expanded business with Anheuser-Busch, Booking.com, American Express, Netflix, Vanguard, CrowdStrike, ADP, Snowflake, Peloton, Autodesk, Shopify, and TripActions to name a few. In enterprise, we signed an expansion deal with the top 20 internet retailer and Fortune 500 company, was already using modern incident response. Knowing for its ability to delight customers looking for variety in stylish, affordable home furnishings, the customer was using a homegrown system that was manual, disjointed, and time-consuming. The new CTO led the initiative to transform legacy systems to best-in-breed platforms. Now, event intelligence automatically groups incidents, substantially reducing the time to mobilize a team, resulting in significant cost savings which we estimate to be over $2 million in labor costs alone per year. The CTO advised us that competitors could not offer these capabilities or comparable cost savings. Last quarter, we also built on our strong leadership foundation, hiring Joe Militello, formerly at Pivotal, as our first chief people officer to help us deliver on our people-first cultural value while scaling the business. Dave Justice, our new Chief Revenue Officer, started in December and has been focused on sales leadership and execution, especially in the enterprise and the market. Dave is partnering closely with Julie Herringdane, our CMO, and already strengthening our high-velocity land and expand go-to-market motion. On this note, I'm pleased that performance for tenured salespeople remains strong and that the initiatives we put in place in the past two quarters, including new sales enablement programs and tools to support overall rep effectiveness, are bearing positive results. Dave has recently hired a new head of sales operations and has applied increased standardization and rigor to our sales process. In Q4, we saw several teams deliver excellent performance, and we continue to focus on bringing all of our teams up to the same high standards. Looking to fiscal 2021, we remain focused on the tremendous opportunity ahead of us while we see both challenge and opportunity in the current environments. In order to extend this lead, we are focused on three priorities. First, continuing to win in enterprise and mid-market. Second, becoming the de facto platform for real-time work. And third, continuing to expand our reach beyond DevOps and IT teams. First, the world's largest companies rely on PagerDuty. With nearly 60% of the Fortune 100 and 9 of the Fortune 10 as customers, enterprise and mid-market continue to present significant growth opportunities. PagerDuty is uniquely positioned to solve the complex problems of the world's largest companies, balancing being easy to use and deploy with demands of scaled resilience and security and advanced features that speed automation and transformation. Our user-friendly e-commerce model, combined with our platform approach, has led to both rapid growth and retention in the high 90s as industry leaders tightly integrate to and standardize on the PagerDuty platform. Our success in enterprise demonstrates that PagerDuty has become an essential component of the world's enterprise infrastructure. For example, a Fortune 500 human resources software company began using PagerDuty two years ago, growing from a 20-user self-service LAN to 2,500 users this year. It started like many of our large customers do, in a team of developers responsible for mobile applications. However, as the company continues its digital transformation journey, They require a platform to enable them to innovate faster, orchestrate and automate urgent mission-critical work, and provide great customer experiences in every moment. In anticipation of a strategic product launch, they sought an enterprise-grade platform that could scale with their growth and replaced a lower-cost, less feature-rich solution with PagerDuty's Digital Operations Management Bundle. Adopting our incident management product as well as visibility and analytics, gives leaders and stakeholders real-time context into performance and reliability at all times. Second, we are focused on becoming the de facto platform for real-time work across small, medium, and large companies. As we've discussed before, there are many providers that help companies monitor infrastructure and analyze logs to understand the health of parts of IT or services, or that route standardized, non-critical workflows with ticketing solutions. These are all valuable services, some of which we use in our day-to-day operations. However, when companies face issues that are unpredictable, customer-facing, and time-sensitive, they need a real-time solution that orchestrates teams, machines, and data in a coordinated, automated way. This is especially important for distributed teams and for teams responsible for revenue-generating applications and technology. PagerDuty uniquely addresses these needs by leveraging machine learning A decade of data and best practices automatically bring together the right people with the right information to solve problems and address opportunities as they occur. To date, our competitive modes include our trusted reputation for delivering resilience at scale, PagerDuty's ease of use, and the platform's security and out-of-the-box interoperability across cloud and on-prem technology environments. In FY20, we deepen these modes, investing in business response, service directory, and a best-in-class mobile user experience, and the largest integration ecosystem in the category. We continue to execute on an ambitious roadmap this year, further leveraging machine learning in new ways, building additional automation and auto-remediation features, improving our user experience, and expanding our application ecosystem to support developers and users across functions. These product investments address critical challenges that our customers face in digital transformation, including DevOps, ITOM, and AIOps. Our third priority is to continue expanding our platform beyond DevOps and IT teams. While customers usually initiate service with PagerDuty within DevOps, 16% of our customers apply PagerDuty to additional mission-critical work in other functions, like security and customer service. especially when issues that impact reputational risk come into play. As we've seen increasing demand, we've invested in integrations and workflows to support new use cases like PagerDuty for customer service in partnership with Salesforce and Zeta as well as PagerDuty for security operations. You can expect to see us advance our roadmap in these areas through continued investment in our robust APIs, our developer ecosystem to encourage devs to build more functionality on top of PagerDuty and in strategic partnerships. An example of this is a global enterprise software company used by property and casualty insurance carriers that provides essential information for its customers to power their businesses. Reliability is of the utmost importance as their customers expect perfection from this long-time PagerDuty customer. They started using PagerDuty in their cloud operations team, then expanded to product development and engineering to support the company's cloud adoption initiatives. More recently, the company rolled out PagerDuty to their customer support representatives who are now empowered with real-time contacts and information to manage inbound inquiries from their customers more quickly and effectively. In the midst of an unpredictable macro environment and the coronavirus pandemic, PagerDuty's heritage as a distributed company built for real-time, unpredictable incidents and unpredictable incidents sees us well prepared to maintain business continuity as all of our teams now work remotely. To date, the coronavirus situation has not diminished our ability to provide services to customers, and we remain committed to the high levels of service and reliability our customers expect. PagerDuty is for people, and we are at our best when the rest of the world is down. In uncertainty and volatility, we still see opportunity. We are clear-eyed and pragmatic. We remain focused on our long-term objective of building an enduring company and are optimistic about the large market that remains in front of us. With that, I'd now like to turn the call over to our CSO, Howard, who will walk us through the financial results. Howard?