PagerDuty, Inc.

Good day, everyone, and welcome. Thank you for joining in. While our attendees are piling in pretty quickly, just a quick technical announcement. For your viewing enjoyment, we highly recommend that you change to side-by-side mode in Zoom if you have not done so in the past. Find the View Options menu at the very top center of the Zoom display. Click View Options and check Side-by-Side. That way you can adjust your view to see more slides or more presenter. Just click the little delimitator there in the middle, and you can slide left and right. Hopefully, that will improve your participation in today's event. We're just about to go forward, and in just a moment, you'll hear from Head of PagerDuty's IR, Willa McMahon. Willa McMahon

Good afternoon, and thank you for joining us to discuss PagerDuty's third quarter fiscal 2021. With me on today's call are Jennifer Tejada, PagerDuty's chairperson and chief executive officer, and Howard Wilson, our chief financial officer. Statements made on this call include forward-looking statements which involve known and unknown risks 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 assumptions only as of the date such statements are made, and we undertake no obligation to update these. During today's call, we will discuss non-GAAP financial measures, which 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 other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as a tool 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. With that, I'll turn the call over to Jennifer.

Thank you, Willa. Oops. Can you hear me okay? Thank you, Willa, and thanks to all of you who have joined us today. We are proud of our Q3 results, and as we were well above our guidance and consensus, as many large enterprises seemed to find a new normal, returning to strategic investments in PagerDuty's digital operations platforms. We are confident this momentum will continue throughout Q4. I'm personally grateful for the health of our customers, our teams, and families as we all face this pandemic together, and I extend our hope that you and your families are safe and well. Building on a strong start, momentum continued throughout Q3, led by strength in the enterprise and mid-market segments. Here on Your Revenue was 26% and dollar-based net retention improved from 116% in the previous quarter to 119%. Our leading indicators, including pipeline, web traffic, and combined free and paid customer acquisition growth have trended positively. Our teams performed well across the globe with an outperformance in North America and EMEA and strong growth in Asia Pacific. In our third quarter since appointing new go-to-market leadership, improved sales execution resulted in increased productivity, close rates, and average revenue per customer. The reception to new products we launched in September exceeded our expectations, especially the response to our expanded automation and auto-remediation capabilities with the acquisition of Rundeck, which we closed in October. Rundeck creates a new and distinct land opportunity for us within enterprise and mid-market DevOps and IT teams and expands our total addressable market, to include automation use cases within and beyond incident management. This deepens our competitive mode. PagerDuty's guiding value, champion the customer, was rewarded this quarter. Many of our largest customers made strategic investments to expand on our digital operations plan, which leverages advanced product capabilities utilizing AI to deliver automation and quantifiable return on investment. In Q3, we captured reinvigorated demand across most regions, segments, and verticals, including deals above $1 million in both tech and financial services, with large deal momentum in retail as well. Four of the five largest software companies in the world expanded on PagerDuty in the quarter to accelerate their DevOps transformation to full-service ownership. This included a very significant expansion deal with Salesforce, who is rolling out PagerDuty's digital operations plan to over 10,000 employees, including multiple teams outside of engineering in support of their ongoing mandate to ensure great customer experiences. We also made excellent progress in our shift from on-call automation to our digital operations platform as customers continued to embed PagerDuty as essential infrastructure. Our digital operations plan accounted for nearly three quarters of our net new ARR, up a striking 65% from last year. We added industry leaders and innovators, including Bell Corp, Chanel, Cred, Lego, Lego Zoom, and MSCI. We saw significant ongoing expansion with customers including Discovery Communications, DocuSign, Pearson, Datadog, Yahoo Japan, and Vanguard, who increased their use of PagerDuty to accelerate operations maturity and performance across their businesses. We also saw digital acceleration increase. Every organization is grappling with the new reality that work, once structured, planned, and predictable, is now increasingly unstructured, unplanned, and cross-functional. The shift to digital first is a one-way door. Consumers appreciate the safety and convenience of life online, and they have little patience for a less than perfect experience. Yet the teams responsible for seamless digital operations face historical increases in events, which, when unmanaged, can cost more than half a million dollars per minute. Our customers' event and API traffic was up 135% year-on-year, yet our event intelligence solution is helping to prevent events from progressing into incidents. Even under this increase in traffic, PagerDuty has continued to deliver resilience at scale, maintaining 4-9's reliability to the business for our customers. This is critical as the PagerDuty platform essentially operationalizes trust for our clients with their customers while reducing the cost of their operations meaningfully. According to IDC, PagerDuty customers are realizing a two-month payback period with an average benefit of over $3 million annually and a three-year ROI of nearly 800%. IDC also estimates the profound shift to digitization will account for 65% of global GDP by 2022. This drives three strategic imperatives for our customers, which are long-term tailwinds for PagerDuty. Digital acceleration, cloud migration, and DevOps transformation. Our digital operations platform empowers new customers across verticals and geographies as they tackle these imperatives. One of Australia's largest banks with over $600 billion in assets is rolling out PagerDuty across multiple teams with the potential for thousands of users in a multi-year partnership on our digital operations plan. PagerDuty provides them with rich, real-time insights to proactively automate and respond to incidents where every minute of downtime is critical. Our platform leverages AI to proactively reduce alerts and resolution times for incidents increasing the productivity of their DevOps, IT apps, and deployment teams while saving a projected $1.5 million annually. As a reminder, most of our new customer lands are Greenfield, the mark of a nascent market where many companies are still early in their DevOps transformation. MSCI is a leading provider of decision support for the global investment community undergoing an executive-led DevOps transformation. They replaced their in-house tools with PagerDuty to scale up over 1,000 users with our workflow automation. PagerDuty will help MSCI reduce their projected thousands of incidents monthly, improving availability, reducing user-generated tickets by 50%, and decreasing the number of ServiceNow tickets by 65%. Like many of our customers, MSCI embraced PagerDuty to reduce their reliance on manual processes and antiquated ticketing systems that cannot address the business-critical, customer-facing issues which require real-time insights, action, and automation. We also grow through serving new teams and use cases, particularly within customer service and SecOps and Rundex Runbook automation. Glovo, a language service provider that connects doctors and patients with interpreters, adopted our new PagerDuty for customer service solution as they pivoted in response to COVID. Before, Global was used at the doctor's office, but saw increasing demand for telemedicine. This resulted in a spike in incidents and customer dissatisfaction with their video platform. So they turned to PagerDuty to drastically improve workflows between customer support and engineering teams. Additionally, PagerDuty's event intelligence has enabled automated escalation, allowing teams to focus on building out and scaling new products and services while reducing disruptions by more than 60%. NowGlobo proactively resolves issues, providing a great experience for doctors and patients uninterrupted. At Summit in September, we unveiled new capabilities resulting in a strong pipeline growth, including service dependency insights, machine learning based recommendations, and change management insights. While most of our customers have accelerated their digital transformation, The reality is they have infrastructure and digital assets that span data centers and multiple private and public clouds. We are the only solution provider enabling incident prevention by capturing and consolidating insights from across these environments, simplifying complex data, and intelligently actioning and automating work. This quarter, we cemented our leadership position at the center of our customers' hybrid, cloud, and on-prem ecosystems with new partnerships. Along with Rundeck, we achieved over 500 ecosystem integrations, many of which were built by partners like Cloudflare, Freshworks, Puppet, and Symfony, who are helping us force-multiply PagerDuty's platform. Q3 was also a record quarter for partner sell-through, as we expanded our presence with channel partners through joint campaigns. We welcomed Tata Consultancy Services, one of the top global systems integrators in the world, to our growing partner ecosystem, They are developing apps to support industries beyond our core verticals, selling and implementing PagerDuty. We also continue to expand our relationships with cloud providers, including this week's announcement as a launch partner for Amazon DevOps Guru. PagerDuty leverages the outputs from DevOps Guru, automating the workflow and enabling customers to comprehensively manage their cloud, hybrid and on-prem environments. Not only has PagerDuty been available in the AWS marketplace for over the last few years, this quarter, we released new integrations to AWS Control Tower and AWS Outpost to help customers on their cloud migration journeys. These integrations and partnerships validate our platform and help extend our reach to new markets and channels. During the quarter, we advanced programs to improve representation and equality at PagerDuty. In September, we open sourced our first annual diversity report, not to imply that we have all the answers, rather in an effort to hold ourselves accountable and share what we have learned with other companies seeking to put sustainable programs in place. We also enlisted as a founding partner of the Board Challenge, a movement to improve the representation of Black directors on corporate U.S. boards. This week, we announced the appointment of Dr. Alec Gallimore to PagerDuty's Board of Directors. as the Robert J. Vlasic Dean of Engineering at the University of Michigan, Alec has a unique view on where engineering and software are headed, and we are thrilled to welcome him. Through PagerDuty.org, we announced over a half a million dollars in new grants to support voter engagement, time-critical healthcare, and to match employee giving. Overall, Q3 was a great quarter for PagerDuty and an important inflection point. I am both optimistic and more broadly, Digital Operations. I am confident in our new opportunity with our enhanced automation offering, opening up new use cases while being additive to our leadership and incident response. And most importantly, I have huge trust and confidence in our incredibly committed and resilient team. who continue to focus on solving important customer problems while raising the bar, deepening our leadership bench and building on the innovative, diverse and inclusive culture that differentiates us. I am grateful to our team, our customers, our users and energized by the bright future ahead of us. Howard, over to you.