PagerDuty, Inc.

Welcome, everybody. Thank you for joining us today and good day to you. We're just about to get started. Before we do, just a little bit of housekeeping to let you know how the program runs today. We will have presentations from both PagerDuty CEO and CFO and then move into a Q&A portion. That Q&A portion will be by invitation to our group. and we have those analysts on as panelists in today's session. So we're ready to get started. I'm going to turn it over to Christine Kuhnen to get us started here. Christine, you can take it away.

Great, thank you. Good afternoon and thank you for joining us to discuss PagerDuty's fourth quarter in 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 today's call will 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 expected 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 will turn the call over to Jennifer.

Thank you, Christine, and thank you all for joining us today. Q4 was an outstanding quarter for PagerDuty. We added $59 million in revenue, re-accelerating growth sequentially to 29% year-over-year as our momentum built to close out an unparalleled year. Thank you so much for joining us. I'm incredibly appreciative of our customers and our partners for their loyalty and trust and grateful to the PagerDuty team whose resilience, commitment, and customer devotion over the last 12 months was both inspiring and delivered a great outcome for our stakeholders. Importantly, Q4 was a strong record-setting quarter for PagerDuty. We closed the largest multi-year expansion in our history, signed our first million-dollar contract in EMEA, expanded our first five-year contract, and achieved record transaction growth in the mid-market. Our results validate our strategic focus and leadership position in the enterprise segment. where dollar-based net retention accelerated above 125%, and overall dollar-based net retention expanded sequentially to 121%, which is in the range we anticipate for fiscal 22. Digital Operations Management Plan accounted for 70% of total net new ARR in the quarter as customers upgraded to advance their operational maturity. For the year, uptake of the Digital Operations Management Plan doubled, now over 20% of our total ARR. Thank you so much for joining us. PagerDuty's modern cloud-native operations platform has become the central nervous system for digital modern businesses. It's designed specifically for mission-critical, emergent work across distributed teams. Traditional workflow and observability solutions fall short in orchestrating the immediate action and proactive prevention of customer and business impacts now required by the real-time nature of our global digital economy, which is clearly here to stay. Our customers have quickly learned that in a world of digital everything, modern dev and IT teams must be prepared for anything. PagerDuty's 2020 Global Developer and IT Operations Report uncovered that nearly 60% of respondents found root cause harder to identify due to increasing app and infrastructure monitoring complexity, and nearly 70% reported struggling with an increase in alert noise on a daily basis. Teams are more distributed than ever, managing increasingly complex hybrid cloud ecosystems with more persistent events caused by a growing volume of security threats, higher velocity deployments, and aging legacy architectures. Our scope within organizations has expanded as more teams engaged in digital operations, usually beginning with DevOps, moving to IT ops, and increasingly deploying across enterprises to include customer service, security, and beyond. Over the course of the year, we saw an increase in transformative work with our customers, where we've become critical infrastructure as teams increased focus on resilience and expanded to new use cases that address unpredictable, unstructured, and urgent opportunities that can make or break the brand experience. One example of this is a North American grocery chain, which sought to efficiently notify customers and employees of food recalls. They rolled out the digital transformation program on PagerDuty's platform to immediately inform 50,000 stakeholders, including checkout staff, in the event of a safety incident, increasing customer safety, satisfaction, and trust. Our go-to-market teams executed well, improving ramp and productivity. During the fourth quarter, trailing 12-month fillings grew 29%, driven by strong expansion, particularly in the mid-market and enterprise. Thank you for joining us. Many of the expansions we saw in the quarter included early renewals as customers added users and upgraded plans in order to execute on their digital transformation and cloud migration initiatives more quickly by leveraging AIOps. Mid-market momentum was also very strong, with our commercial team setting a new bookings record, growing transaction volumes by 48% versus last year. We saw momentum in APJ and EMEA and announced today our first EU data center to support growing demand in the region. Once again, we saw strong expansion in the quarter with many of the largest, fastest-growing software companies in the world like SAP, Intuit, Datadog, and Autodesk. Our leadership and financial services also gained momentum. Morgan Stanley expanded its long-term relationship with PagerDuty, investing in thousands of licenses on our digital operations platform. Another global 100 investment bank steadily expanded over the last two years on our digital operations plan, demonstrating the strength of our long-term relationship and reliable customer expansion. The CIO and CTO championed one of the largest expansions in Q4 for a total of 8,000 users in a three-year, multimillion-dollar contract as they adopt DevOps and full-service ownership and transition to the cloud with a you-ship-it, you-own-it mindset. They expect to realize $10 million of annual benefit from PagerDuty as they retire their homegrown systems and improve efficiencies across the organization. One of our competitive advantages is the diversity of our customer base and leadership across verticals. During the quarter, we landed and expanded with several energy customers where PagerDuty is literally keeping the lights on. One is a major Northeast utility that developed a web app to provide their consumers with winter outage information and service updates. PagerDuty replaced their in-house on-call management solution and was deployed to the entire infrastructure, IT, and development organization with other business groups expected to adopt PagerDuty in the future. Similarly, a new Fortune 500 customer that provides electricity for 3 million customers in the Midwest adopted PagerDuty to modernize their operations by reducing manual processes, which contributed to poor customer outcomes. They're also using PagerDuty to automate time-critical workflows and more effectively measure and improve KPIs. They anticipate they'll realize a 20% reduction in labor costs within customer support and a three-month payback period. While 2020 was uniquely challenging, it also created unique opportunities. Over the course of the year, we deepened our competitive moat on several fronts. We advanced our platform value proposition with the acquisition of Rundeck, bringing machine-based automation and safe self-healing to incident response and other use cases like IT, DevOps, and security. Carrefour Financial Solutions Brazil, the financial services arm of the Fortune 500 global retailer, adopted PagerDuty and Rundeck to anticipate problems and automate incident response through self-healing. With over 10,000 employees, Carrefour aims to accelerate their digital transformation efforts while reducing costs. They turn to us to improve the quality of their service across their IT, infra, monitoring, and service teams in order to deliver increasingly intuitive digital banking experiences to their customers. Another large multinational financial services company adopted Rundeck during the year to automate and standardize on its core financial operations across six data centers. The bank's initial Rundeck users started on our open source offering, then scaled to the paid enterprise plan. Following their initial deployment, the bank expanded PagerDuty and Rundeck globally to manage 24,000 systems, substantially reducing labor costs and enhancing audit tracing capabilities. During the year, customers adopted PagerDuty beyond incident response to service to security and customer service, where users grew 56% and 40% respectively. HashiCorp, LegalZoom, Discovery Communications, and Slack use PagerDuty for customer service. Slack's customer service agents use our platform for full case ownership, escalating customer-facing issues to the right subject matter experts or developers so that they can be resolved quickly. We continue to add to our robust API-based integration ecosystem, accelerating our network effect and cementing our position as the hub for digital operations and incident detection. We continue to expand our ecosystem in the fourth quarter, now connecting with over 530 integrations, including change event partners like BuildKite, GitLab, and Jenkins, and security partners like JFrog. Integrations enable seamless work across platforms and teams when seconds matter. During the year, we distanced our innovation-based lead in developer-centric incident response and management, broadening our AIOps solution with significant enhancements to service directory, change management, incident insight and Slack, and even more bi-directional chat features in Microsoft Teams and Zoom. ARR from event intelligence grew almost 160% over the previous year. New releases in the fourth quarter included automation, self-remediation, and deeper customer service integrations. We launched change impact mapping, which allows developers to easily identify code changes that impact their services and more quickly resolve incidents. This is a game changer for customers because, according to Forrester, change events cause roughly 80% of service disruptions. Our deep integrations with Buildkite for CICD and Microsoft GitHub and GitLab, the largest repositories for source code, make these new capabilities even richer. We launched version 3 of our Zendesk integration, linking Zendesk events to PagerDuty incidents and synchronizing incident priority, details, and escalations from across both platforms instantly. Patriot Duty's resilience and ROI is incomparable. As the accelerated digital transformation and society's increased reliance on the Internet to learn, work, and live tested our platform, the platform delivered. In 2021, we processed 41 billion events and API requests, yet improved our customers' average resolution time by 20%, while sustaining four nines of availability and notification transit times. In the last year, our customers became even more reliant on our platform in the face of a challenging business environment along with digital acceleration. We believe this will lead to ongoing reliable expansion with our customers. According to IDC, PagerDuty's enterprise customers achieved an incredible 800% return on investment over three years, a two-month payback period, and an average of $3.5 million in savings annually by increasing efficiency and productivity within organizations Through facilitating autonomy and service ownership amongst users, reduced time spent on issues within the incident lifecycle led to 27% more productive DevOps teams, 18% productivity improvements for IT and infra teams, and 10% improvements for customer support. Thank you for watching. As our reach expands to employees across the enterprise, our in-app experience becomes even more important. During the fourth quarter, we welcome Sean Scott, our first chief product officer. Sean is a product and e-commerce expert, having spent over 10 years leading the teams responsible for Amazon.com's home and product pages. Most recently, he built the robotics, hardware, and software teams responsible for developing Amazon's fully electric autonomous delivery system called Scout. Sean's consumer product experience will help us to continue to delight our users and accelerate our business through product-led growth. His background dovetails perfectly with our history of growth and innovation through seamless, fast time-to-value, user-centric products. I'm excited to scale our platform and innovation to new use cases under Sean's leadership. We are both confident and optimistic about FY22 as we see the acceleration in secular tailwinds, cloud migration, DevOps transformation, and digital acceleration continuing over the long term. IDC predicts investment in digital transformation will be $2.3 trillion by 2023, almost double today's spend. Thank you so much for joining us. Thank you so much for joining us. I'm incredibly proud of our progress in FY21 and I'm bullish about the future as the market and macro trends meet us. I'm grateful to be part of a leadership team and company that both stands for equality and programmatically invests to achieve it in our company and in the industry. In FY21, our inclusion, diversity, and equity efforts resulted in improved access, representation, pay equity, and greater career opportunities. We continued investment in volunteer support for racial and social equity and inclusive leadership development. To further strengthen inclusive hiring, we launched partnerships with two historically Black colleges and universities, North Carolina A&T and Alabama A&M, and two Hispanic-serving institutions, Florida International University and the University of Houston. Our board of directors is among the most balanced in the tech industry, representing the diverse communities we serve. In Q4, we welcomed our newest director, Bonita Stewart. Bonita currently serves as the vice president of global partnerships at Google and brings decades of experience in marketing and strategic partnerships, which will serve us well as we develop our brand, our market position, and our partner ecosystem. Next week, we're releasing our first social impact report, building on our diversity report published last September, which outlines our progress and underscores the ongoing work we will continue to do. PagerDuty employees are at the heart of our social impact. Their talents, passion, and business expertise extend well beyond the workplace. During the year, 93% of our employees gave back through community service or financial donations, volunteering several thousand hours and donating to support 110 nonprofit organizations globally. We deployed over a million dollars in grants through the PagerDuty.org fund. As we celebrate Black History Month and International Women's Day and stand with the Black and Asian communities against hate and violence, I implore every leader and leadership team to join PagerDuty in allyship in challenging bias and systemic racism and in architecting a more equitable and accessible industry and community. With that, I'll turn the call over to Howard.