PagerDuty Inc at Berenberg Design Software, Cybersecurity & DevOps Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Great. So let me just start with -- just, I guess, broadly, should we think about DevOps trend, what developers typically do and what IT typically do. It's been -- the gap has been closing. And developers are taking more ownership of running and maintaining the apps that they build. So -- but if you compare that trend today to maybe 4, 5 years ago, what have you seen in terms of increasing momentum or just how do you see that trend develop?

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Yes. That's a great overview. You mentioned the 200 integrations are now moved to 500. And there's certainly a lot of internal development that went into that, but it sounds like the market, in some ways, is coming towards you, and that's what your partners and customers are naturally gravitating towards PagerDuty. So I guess is that what you're seeing? And then it's -- what are some of the drivers that make PagerDuty sort of like a platform to be a partner with and what your use case is?

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Right. But yes, that's amazing. And that you mentioned just the greenfield opportunity here, phone trees, Whatsapp. But yes, I think greenfield is -- that term has turned around a lot, but it's really true about PagerDuty. But so for a customer that's sort of adopting PagerDuty in that way, may be helpful to hear a little bit more about what other tools they might be using at that stage of their technology adoption life cycle, not necessarily what PagerDuty would be doing? And then what -- how are they viewing that type of purchase? Like what are the metrics they're using? Is it ROI or is it really just that the product is just sort of delightful at that point and they think that it's something that they need to have?

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Right. Yes. That's perfect. I had other questions. But now, Howard, you made me think of specific ones. So whether it's a log management provider or APM and you have ticketing as well, it's -- the value of PagerDuty has always been the Swiss-like independent platform. So one would -- I'd like to hear more about how you see that -- the benefits of that develop over time and the market recognizing that? And then two would be, do you see any benefits to a platform being like integrated into -- or your kind of offering being integrated into larger platform, maybe you've seen other companies acquire. But it's not clear that there's a product benefit as much as a cost benefit. So just give us your thoughts.

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Right. Yes. I mean -- and you're right that a significant reason why we've ended up with so many tools per organization is just the sort of the siloed buying centers or organizational structures. So -- but I guess not even just about the technology of PagerDuty. But do you feel that you're better positioned to connect those or appeal to those different buying centers or like types of users than maybe any individual platform might be?

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Right. Yes. And then the piece there too that it's kind of tangential, but it's not in the sense that you have a customer service product today. In the past, you've appealed to that user without having a formal product. So does that also enable you to better tie in these different sections of the business than maybe a traditional observability platform might?

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Great. And then back to the TAM. I mean, since you mentioned the $25 billion and if you think of it more broadly, the $100 billion, I guess, if you could just maybe for the layman or just like a brief overview of what that kind of entails? Or if you were to kind of expand above $25 billion, what the most likely pockets would be to move up to $30 billion or $40 billion?

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : That makes sense. I guess, for those that may not know that market as well. Are there -- like what would be some other types of platforms or maybe even companies that would -- you'd start to -- would encompass digital operations that might not fall into the $25 billion? (inaudible)

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Okay. Yes. That makes perfect sense. I mean, you mentioned automation. It seems like that's a good segue into relatively recent acquisition of Rundeck. As an example of more automation and just sort of you could become closer to resolving the full life cycle of an incident by changing the actual code. So is that the right way to think about that acquisition? And is this just a trend that you would like to continue over time? You may be muted, Jen.

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : No, it does. That's a -- that's very helpful. And I think that -- I imagine that there's many things that could be improved with simple automation like that, that you just described. I was interested, and you mentioned just some of the use cases outside of DevOps, if -- or what those might be or just the benefits that you're speaking to?

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Yes, that makes sense. A while ago, you mentioned one of the attractive parts of Rundeck is that it gets behind the firewall? And just inevitably, you have customers at 1 foot in 1 foot out. Is that a -- is that -- are you beginning to work with more of those customers as you've kind of focused more or had success selling just like larger platform sale or has that been relatively stable? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 12, 2021 / 6:00PM, PD.N - PagerDuty Inc at Berenberg Design Software, Cybersecurity & DevOps Conference (Virtual)

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Yes, it doesn't. It -- you described perfectly well why the product can get into organization so quickly and expand so quickly, especially on the number of users. So -- but you've made a lot of progress in terms of just percent of ARR in terms of digital operations bundles as well. So I guess, what are the some of the improving trends that are allowing you to just expand on your large existing user base today?

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Yes. That's excellent. Just a bit on the -- just the efficiency of the platform, you've always had very strong gross margins. And I think you've wouldn't have even minded to give up a few points in terms of accelerating growth but they remained in the high 80s. So I guess, if you could just provide some color for investors on the efficiencies and how that's going to be durable profitability?

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : That's a great review. We touched on some of the changes or how -- what's enabled you to move to a higher percent of ARR from the digital operations. There's, I think, some simplifying of the bundles. But just curious some broad insights or things that you've learned over the past 3 years in terms of what customers are receptive to, whether that's on a product basis or just even something like making your customer service product as well. So...

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Okay. Just maybe probably the last area we'll be able to touch on is, you talk about customer experience. And we've talked about the relationship with the IT users or the devs. How -- with something like the Zendesk integration or just, I guess, the customer service offering in general, how would that touch point with that type of user compare to an IT or a dev, not necessarily own any customer relationship but just exposure so?

Question: William Kingsley Crane - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Yes. And then it seems like if you're spanning devs and customer service, maybe there's that idea that you can move into that third area of IT. And also, I'm sure many can resonate with being told that they can't see their information. That's just why they need to transfer them. So yes, like in context it's a problem. But thanks, again. This has been great. Jen and Howard, thanks for joining us. I think we're running up on time.