Q3 2022 PagerDuty Inc Earnings Call
Wherever critical unstructured work arises this enables leaders to keep their teams focused on forward looking innovation that drives and customer trust and ultimately revenue and growth.
We innovate successfully across use cases and departments and as we do that paid you're getting grows from the foundation of digital infrastructure to enterprise wide operations cloud accompanies primary platform for engagement.
Our platform is seamless to deploy and purpose built to manage the increasingly complex environments and time critical challenges underpinning the digital economy.
In Q3, we continued to grow both our foundational presence in Dev ops, and I T and our functional use cases horizontally and vertically up two executive leadership, we successfully executed against the $36 billion total addressable market within our customer base and have created multiple engines for durable growth as well.
Deepened our competitive moats.
Increasingly effective execution of our land and expand motion against strong demand for <unk> from enterprise and mid market as well as a favorable competitive environment saw third quarter financial results exceed the high end of our guidance ranges and consensus with revenues for the quarter at a paid your duty record $72 million and our non-GAAP.
Operating margin improving by 400 basis points over last year also ahead of guidance and consensus.
In addition, new customers in the enterprise and mid market segments grew 13% year over year during the quarter and the number of customers spending more than $100000 in <unk> with Pedro duty grew 35% year over year with the backdrop of favorable macro conditions, including digital acceleration the talent shortage requiring increased.
Productivity, increasing cyber threats and ongoing cloud migration trends. We're confident this momentum will continue and are therefore, raising our top and bottom line guidance for the full year.
Companies across all industries continue to adopt a digital first outlook and invest to progress their digital operations with the software retail and financial services verticals driving Pedro <unk> growth in Q3.
Broad industry traction almost immediate time to value clear monetization of new products and renewal rates above 95% form the foundation of our durable revenue growth as we scale.
More than 19000 free and paid customers, both the largest companies and the most disruptive startups in the world now run on Patria duty the introduction of our free tier last year removed barriers to entry for startups and small businesses, while enabling our go to market teams to focus on high value mid market and enterprise customers.
According to research our recent survey.
According to research for a recent survey of global technology industry leaders, 72% indicate they are accelerating digital transformation in their organization paid or to be help customers address the challenges of digital acceleration by operationalize and customer Trust in Q3 alone two fortune 200 companies turned to Pedro duty.
Our consumer financial services company that deployed our platform to drive standardization and a public utility that introduce paid your duty to leverage automation for a better customer experience. These clients predict ROI between 400, and 650% within three years with payback periods as short as three months in advance.
Dish in a multibillion dollar automotive technology company now relies on paid your duty to unify its incident management practices.
Times of value is a competitive advantage for paid her duty as the platform can be deployed within minutes to do to ease of use and native interoperability with today's complex systems.
Through first class API. It connects to services the profit enterprises ecosystem immediately providing visibility workflows insights and automation that translate to value in days and weeks rather than years.
With more than 600, and twenty-five prebuilt platform integrations Pedro to be quickly becomes embedded in and automates our customers operational systems workflows suffered celebrity telemetry and culture.
And no other platform is more reliable secure and resilient at scale then paid your duty.
Enterprises Trust Pedro duty, because we continually demonstrate increasing value and reliability delivering rapid ROI and earning the confidence of the senior leaders.
Volcker's choose Pedro duty because of our relentless focus on not only their organization's goal, but also the user experience that improve their quality of work and life.
Over time these have proven to be deep sustainable competitive moat for us.
Pedro did he is powered digital first businesses for over a decade train teams up to focus on innovating for their customers by accelerating and transforming their digital operations from reactive to proactive and preventative.
By applying AI to harness both a deep understanding of human workflows, and our rich proprietary dataset combined with automation and event intelligence Pedro duty reduces both the volume of work and the time. It takes to complete tasks. This quarter, we saw new customers such as Burberry locked Pedro duty to reduce response time.
As to customer issues and improve the consumer experience.
In a digital first economy. The way we work has changed permanently now mission critical work is managed by teens distributed across geographies and time zones underserved by traditional traditional ticketing workflows.
Hey, Judy uses machine learning to anticipate the needs of our customers and identify escalates automates and resolves critical issues for these businesses before customers employees or the businesses reputation are impacted.
This quarter, a fortune 50 global technology company expanded their relationship with Pedro duty adopting our customer service operations offering in an effort to continually improve the quality of their customer service and experience.
Previously the customer was unable to manage code red incidents effectively leading to customer escalations that reached its senior executives.
Customer service leadership at the company chose Pedro duty to help them improve service levels for premium customers.
Our pace of innovation continues to accelerate with product teams launching new paid your duty applications for Salesforce service cloud and data dog in the quarter, we kicked off Q4 with our fall product launch, which extends our platform to include intelligent automation injecting control in logic at the event layer pay duties new event orchestration.
<unk>, our AI ops offering reducing manual processes to gain operational efficiencies, while our just launched service standards enables account owners to enforce best practices at scale for all of their managed services.
Pedro to be automation concurrently be deployed in a customer's environment and it's also now available as a cloud service, providing the high availability security and scalability our customers expect from US. We now provide the only cloud native platform that combines real time incident response with time critical AI ops insights and Automd.
Asian to help enterprises more quickly we're quickly realize their digital first strategies.
Typically our customer cohorts following adoption pattern that maps to the digital operations maturity curve, most organizations start by manually and reactively managing issues as they arise.
Mature companies predict and prevent issues before they even impact customers or the bottom line.
Most pages duty customers are still early on this curve, providing a long runway for growth within our existing customer base, our platform accelerates the speed with which enterprises evolve their digital operations and as customers move up the curve from manual to reactive towards proactive and preventative both their annual investment with paid your duty and there are.
Roy expand as our product expand virtually across use cases, Pedro duty emerges as the operations cloud and a standard platform for engagement across the enterprise.
Guidewire nearly $10 billion technology platform that serves the property and casualty insurance industry has been a pager duty customer since 2013 and.
In Q3, Guidewire expanded their use of event intelligence and deployed our customer service operations applications for Salesforce service cloud to support ongoing cloud migration efforts and streamline operations in order to meet rising customer expectations Guidewire customer in cloud operations organization needed a comprehensive and reliable system.
To manage their increasingly complex digital operations.
Pedro duty as their central partner.
And attacked and resolve issues before their customers experienced them today 17 teams of Guidewire, including the senior executive team use paid your duty to centralize and integrate all of their monitoring tool increased cross team collaboration for time sensitive incidents and automate action on mission critical items.
This is a typical customer journey across our installed base initial deployment rapidly demonstrate value leading to expanded paid your duty across pedro to use across multiple teams within the organization.
Last week, we released paid your duties second annual inclusion diversity and equity report our company's commitment to equity remains unwavering as it is foundational to our values part of our mission and culture and embedded in our business strategy.
We are more innovative higher performing and more successful when we reflect the diverse communities we serve.
The report is a transparent account of our progress in building, an equitable diverse and inclusive board company and culture, which we share both to hold ourselves to high standards and to hopefully inspire other companies in their own idea knee journeys.
While I am proud of some of the milestones we have achieved like gender pay equity and one of the most diverse boards in the industry. We have more work to do and remain committed to leading the industry by example.
Finally, Pedro is poised for a record revenue result in FY 'twenty, two with annual growth accelerating a $36 billion Tam and a strong demand environment in front of US we have an incredible team terrific partners and customers we admire.
While our results speak for themselves I wanted to reiterate our vision the mission, we're on and our purpose, which inspire our innovation and our drive to ensure our customer success over the long term.
We envision an equitable world, where we transform critical work. So all teams can delight their customers and build trust.
We're on a mission to revolutionize operations and build customer trust by anticipating the unexpected in an unpredictable world and.
And importantly, a greater purpose is to empower teams with the time and efficiency to build the future.
Trust is central in all of this something we seek to earn every day and I want to thank our customers our Newtonian our partners and shareholders for placing their trust in us with that I'll turn the call over to Howard and I look forward to your questions.
Thank you Jane and good day to everyone joining us.
Our financial results for Q3 demonstrate our continued momentum and success in becoming the operational Todd for the modern enterprise.
Consistent execution in the enterprise and mid market led to another strong quarter with revenue of $72 million, an increase of 33% year over year and above the high end of our guidance range.
International revenue grew at 36% and represented 24%.
24% of total revenues.
Our high dollar based net retention rate at 124% is driven by consistent use of expansion plan upgrades and new product purchases.
Rates of 124% compared to 119% in the third quarter of last year.
At the high end of the range that we guided to Q2 coal.
We expect <unk> dollar based retention to fluctuate from quarter to quarter and are confident we will achieve at or above 120% in Q4.
We ended Q3 with 14486 paid customers up 6% compared to a year ago.
As a result of focused targeting our product innovation and go to market efforts, we saw paid enterprise and mid market customers up 13% year over year.
In addition, the number of total companies on the platform exceeded 19000 at the end of the quarter up 29% compared to a year ago.
You may recall, when we introduced a free tier a year ago. Our intention was to drive focus on higher value logo acquisition, and the enterprise and mid market and remove barriers for entry in SMB. This is working well as we see good growth in enterprise and mid market and strong growth in overall company.
With a more efficient plant motion could start ups and if indeed.
General strength and momentum in enterprise and upper mid market continued in Q2 as 543 customers at ease.
More than $100000 of error on page Judy.
Up 35% compared to a year ago.
The growth in this cohort represents both new logos and expansion.
Our digital operations planning, which bundles, both our core and new offerings, including AI ops, but excuse automation grew 65% year over year, representing approximately 22% of our total are all up from 18% a year ago, demonstrating success in upsell and expansion.
Customer base, especially in the enterprise and mid market.
For Q3, our non-GAAP gross margin remained best in class as we scale at 85% within our target range of 84% to 86%.
And this demonstrates the efficiency of our infrastructure differentiated scalable with enhanced architecture and programmatic approach to customer support and success.
Non-GAAP operating income improved to a loss of $5 million or 7% of revenue compared to a loss of $5 $9 million or 11% of revenue in the same quarter last year.
Overall, our non-GAAP net loss per share was 17 opinion data than eight cents in the third quarter.
Last year.
In terms of cash cycle of the quarter cash from operations was $3 million and free cash flow was $2 million.
We expect cash from operations and free cash flow to decline sequentially due to Q4 outflows attributed to our employee stock purchase program of $5 million and the semi annual interest on our convertible debt $2 million.
Free cash flow will think to surpass Cisco related leasehold improvement expenditures of approximately 1 billion bottles.
Turning to the balance sheet, we ended the quarter with $545 million in cash cash equivalents and investments.
Total deferred revenue ended the ultra is $143 million up 33% year over year.
Quarterly billings were $81 million, which was an increase of 44% year over year at the high end of the range, we provided of 25% to 35%.
As a reminder, in Q4 FY 'twenty one total deferred revenue included a benefit of approximately $6 million from early renewals.
This creates a tough comparison this year as we anticipate these contracts to renew again in Q4, and we do not foresee any early renewals benefits again this fiscal year.
Given this we expect our coffee billings growth will be in the range of 20% to 25%.
On a trailing 12 month basis billings grew by 31% to $297 million compared to a year ago. We expect trailing 12 months exiting the fourth quarter to grow at approximately 25% compared to Q4 of the pipe.
Yes.
Turning now to our guidance for.
Although fourth quarter fiscal 2022 we expect revenue in the range of <unk> 75, and a half to 76 and a half million dollars.
Representing a growth rate of 27% to 29%.
Non-GAAP net loss per share in the range of five to six times. The basic shares outstanding of approximately $86 million. This implies a non-GAAP operating margin in the range of make it a full to negative six.
For the full fiscal year 2022 we are increasing revenue guidance for the full year to <unk> 78, and a half two children and 59 and a half million dollars representing.
They're preventing a growth rate of 30% to 51%.
We expect non-GAAP net loss per share of 33 to 34 things with basic shares outstanding of approximately $84 million.
This implies a non-GAAP operating margin of negative 9%.
I want to thank our customers for their trust in us and our team for delivering continued momentum with a strong third quarter financial results strengthening our position as the operations to the model into this.
This underpins our confidence in continuing to deliver durable revenue growth.
With that I will open up the call for Q&A.
Yes.
That's why you do that Howard I was going to make some closing remarks, if that's okay.
Sure.
So very quickly I just wanted to summarize Q3 was a terrific quarter with continued momentum accelerating annual growth and a confident outlook driven by a positive macro environment product innovation and room to expand in our base great execution by our teams.
We have become the standard for incident response, providing a strong core business that we are building on top of the rebuilding new products and services on top of and our business grows durably as we advance our position as the operations plowed into modern enterprise with that I will turn it over for questions sorry about that.
Thank you Jay.
Excellent. Thank you, we're going first to Sterling Auty with J P. Morgan Stanley go ahead. Please yes, thanks, hi, guys.
So I think it was about this time last year, you talked about the premium model to just pricing in general just curious did you make any modifications at this point this year and how you're thinking about that moving forward.
Well the freemium model has continued to be a great learning and kind of growth opportunity for us as a business you know remember our original goal was to make it easier for developers and the most disruptive startup says to leverage paid your duty and build that into their infrastructure and as you know we have very strong retention and so on.
Those customers grow it creates the opportunity for us to grow with them.
What that's done by automating that part of the funnel, it's freed up resources to focus on more expansive midmarket and enterprise customers and that's allowed us to learn more and more about how we can push our high velocity emotion upmarket, which has created some great efficiencies for us. So yeah, we continue to learn but we are real.
Happy with how the how the free trial or how the free tier is working alongside of our free trial, which converts our customers to paid as well and then Howard one follow up for you in terms of noticed the incremental operating margin.
On the operating leverage that generate not only in the quarter, but also on the guidance for the fourth quarter.
Is that purposeful or where are you in kind of your hiring plans.
Yes, Thanks Sterling, it's certainly it's purposeful.
We in fact have been doing really well in terms of hiring in Q3 was a record hiring quarter for us which of course covered across the business engineering sales and other functions as well, but we have been looking at how do we deliver better efficiency in terms of sales and marketing and G&A, we obviously, you're always trying to keep.
R&D expenditure around the 25% of revenue, which we expect to do within.
Within Q4, but certainly been looking for efficiencies in the other two areas without compromise.
Okay.
Makes sense. Thank you.
Thanks Dale.
Thank you, we'll go to Rob Oliver with Baird. Thanks.
Hey, this is chronic gortari on for Rob.
He had a conflict sorry so.
So you announced the Ronda cloud on AWS partnership coupled with Bakken, but just curious how rhonda just doing the new logos is that still a factor or is it still garner more expansions with existing accounts.
So a question for John maybe.
Thank you for the question well first of all really excited about both the announcement of a paid your duty automation available in a cloud offering we think that opens up opportunities for customers that prefer to deploy through the cloud as opposed to in their own environment.
And run neck has continued to perform very well in terms of both new customer lands and expansion I think most important bringing automation into our platform alongside of incident response, AI ops and now customer service operations really it makes the platform much more complete as of total operations Todd for a customer and really differentiate.
The platform competitively. So we're happy with how that is going I'm equally I'm really thrilled with the way our partnership with AWS has advanced so we have historically worked with AWS and marketplace, we've doubled down with them from a go to market perspective customers can retire AWS committed spend on paid your duty license.
<unk> and now the AWS Salesforce can also retire quota against paid your duty consumption. So a great channel opportunity for US and you know that's continued to be a very a very good relationship for us from both a product and a go to market perspective, so excited on both fronts.
Thanks, Ron really helpful. So just a quick follow up for Howard yourself.
I remember you mentioned.
That would be expansion red last quarter had some contribution from our joint customers from Ron back as well.
So just wanted to understand the dynamic garlic, the NRO coming at the high end of the guide and unpack that a little bit do we run back on comps.
Yeah sure. So I think just for context run bank remains.
From a size perspective, it doesn't move the needle materially in terms of a dollar base retention. So I think you'd have to see it in the context of a larger business, which is now over.
Over $300 million in <unk>, but certainly the contribution is there and we're seeing both the expansion that's customers acquiring run they can one customer that comes to mind for me. This quarter was zee scalar who had been a digital operations customer and then added.
The automation.
Any automation will one day into the Mexico them, so that they can broaden their footprint to be able to cover all the way from detection to order remediation and delivering a good experience. So we're definitely seeing that motion happening with existing paid annuity customers are adding too to date.
With us by adding automation.
But it's just in general across the board upgrading our plans taking on the new products and adding new users is contributing to that really strong.
Have you at all.
Got it thanks, a lot Howard and John Congrats on another great quarter. Thank you. Thank you.
Thank you next we'll be hearing from Keith Weiss with Morgan Stanley.
Just one very nice quarter, guys and thanks for taking the question.
One four.
And then one for Howard.
You talked about a favorable competitive environment in the quarter does.
Is that anything has changed in the competitive environment or is that more so a page of Judy comment that with sort of the product innovations you guys are putting out you've expanded sort of the competitive gap and that's what you guys are benefiting from.
Well, we continue to see lands be greenfield as we have in the past and in fact, we have seen the competitive environment improve where because of the breadth of the platform. We're not seeing as much discussion around other vendors because there isn't anybody that's bringing in automation in incident response together, so frankly, it's improved.
We're thrilled to see the investments that we've made particularly in Midmarket and enterprise from a product perspective pay off and and again you know I think it's an early a nascent market our customers still have a lot of work to do to support their digital first sort of customer experiences and I think Pedro duty is the right platform at the right time to help them.
Solve some of those new problems that they're experiencing.
Got it.
And in Howard actually two questions for you. One is just a clarification can you just walk us through the pull forward dynamic that you were talking about in terms of billings for Q4, I just wanted to make sure that we're clear on that and are there any other kind of periods of pull forward that we should be aware of and then the actual that's just a clarification. The question is the durability.
Dollar based net expansion.
Okay.
Couple quarters are a really good dog business expansion is the mid 100 Twenty's is that a more durable rate on a go forward basis now.
Alright, so I'll sort of billings, but then it'll come back to the dollar based net retention. So in terms of billings the adjustment that I was referring to there was really around in Q4 of last year, we had unusually high growth in billings for the quarter with 41% and part of that was driven by $6 million of early renewals.
<unk>, which would would've renewed in Q1 of the next year, obviously, but is it going to renew in Q4 of this year. So we don't have that same benefit so if I back out that $6 million and do a comparison on a trailing 12 months basis. In fact, we will exit the year at around 30% in terms of billings growth. So that's.
The pulpwood and we're not anticipating anything unusual like that.
This quarter.
Perfect.
Then.
On the dollar based net retention.
124, with a really strong results and we think therefore that accompanies it's all size and scale being able to deliver a sustainable 120%.
Is best in class and so for US we are focusing our efforts on maintaining that label in this whole being Q4 will be our fifth quarter of being above 120%.
Excellent. Thank you very much guys great quarter. Thanks, Keith.
Hearing next from Chad Bennett.
With Craig Hallum.
Great Hey, guys. Thanks for taking my questions.
Hey, Chad.
So I guess just on digital ops plan.
Warmed relative to expectations in the quarter.
It's still putting up really good growth, but obviously decelerated from doubling year over year last quarter to 65% and I think as a percentage of.
<unk> at 22%, it's kind of been here just kind of how did that perform whether it's from a net new logo sales standpoint or from a net expansion standpoint, and how do you expect that probably more importantly to grow over the next year.
Yeah, So I'll take that gain and you can chime in so we are really happy with the performance of our digital operations plan.
It ties in really closely with the long runway that we have with our customers in terms of as they progress through.
The different phases of digital operations maturity. The digital operations plan becomes a very natural fit to help them move to those more proactive and predictive approaches. So for almost every customer that we have this opportunity for them to expand by taking on the digital operations play. So we continue to see really good.
Momentum.
With the digital operations and we had multiple upgrades on the digital operations playing within within the core the customer paying for business to digital ops as well as new lands so and.
So there's good momentum there we are we feel that with <unk>.
82% of our total <unk> represents a real indication of products attached if you like and we expect to continue to see that they perform well.
Okay.
And then.
No I'll give this a shot for it but can you speak to enterprise net expansion.
In the quarter Howard or for <unk>.
But if it was at $1 30 range or so.
For this quarter, we decided just to focus on in terms of our metrics to make sure that it was easier and capable people to two to focus on the overall view, which was the view that we've shared our bonds and 24% range for the quarter.
Okay.
Then maybe last one if I could so we're up to almost 550 customers over 100000 and.
The ECB I guess you'd call. It obviously you have a significant number of paid customers is there any reason to believe.
For the next couple of years that that's over $100000 or cohort.
You know, it's been growing kind of mid 30%.
It seems like we're still like first or second inning, where that should grow at that growth rate for the next few years is that too aggressive.
So what I would say is that we've seen a very steady increase every quarter, but obviously, it's a and that's been very predictable as part of <unk>.
Durable growth.
As a company is the fact that we continue to see customers moving through the cohorts and we don't always share the numbers above 500 cat above a million, but you'd see a similar pattern of customers, making that progress and so again, it's five into the very long runway that we have with the majority of our customers to be able to continue to do.
To do that so we don't anticipate that that would should suddenly changed we will continue to grow our customers and see that they'll continue to add product add uses take on more advanced offerings.
Got it thanks, so much nice job on the quarter. Thank you Chad.
Thank you next we'll hear from Derrick Wood with Cowen Derek If I could have you do you want to switch on your video yeah great.
Great. Thanks could shoot team paid your duty.
One.
For Jan I think picky imagine that you've got you had a landmark quarter end customer service could you just double click what what was special about this quarter.
Why you're seeing maybe adoption kicking into a new gear and perhaps comment on what kind of early demand youre seeing with the salesforce offering.
Yeah, we're really excited about where we are from a customer service perspective, because you know when you when you build an adjacent product you know based on kind of this analogist problems that like if you think about how tech teams detached and deal with incidents, it's very similar to how customer service teams learn about customer issues in half the time.
Sensitive challenge of having to like diagnose them figure out how to deal with them and then communicate them and so Peter do you as a natural fit for that problem and Salesforce has been a terrific partner in helping us bring together what we can do from a mission critical time sensitive work automation perspective within Salesforce service cloud what's been.
Really exciting to see are some of the larger wins that we've experienced so one in particular I mentioned in my prepared remarks was a fortune 50 company, where we did a seven figure deal that created was created and closed in the quarter through a reference from another executive and I think it just points to how strategic customer service.
Has it become in a world, where you have to win the customer over and over again and demonstrate trust and build their loyalty in a few seconds of a customer experience if that doesn't work well and it's you know it's very costly for the company. This quarter that particular customer expanded from a more of a traditional paid your duty.
<unk> two are adding our customer service offering and that's seen them really reduce the existence of these code red issues that make their way all the way up to leadership, where you know it's not a very efficient way to handle the problem. If you have to get your executive team involved in it and so you're saving tie.
We're saving money, you're improving the overall executive experience and I think what was exciting about that one like I said it was kind of a self referencing deal and we see salesforce in that partnership as creating a tremendous opportunity because they are all over enterprise and you know they are the platform of record for customer service and test.
Our management, so we're pretty excited about that and what's interesting about the product as you can do all the things that you can do inside of paid Judy without leaving service cloud environment. So no context switching you know an easy to use in a time sensitive environment and very quick time to value. So I think even at this particular customer more expansion opportunity.
Perfect Great Great to hear Howard maybe one for you it looks like the new customer generation.
I stepped up nicely. The last couple of quarters. I know these are probably a lot of them are at the lower end, but could you remind us how quickly you tend to.
Maybe strike an expansion deal after you land a new customer then.
So given given that uptick in new customer generation does that give you better visibility into growth in future quarters.
It absolutely does and I think this has been the beauty of the free tier for us because what that does is that it gives us visibility into that customer's life cycle.
Earlier than we would have previously because without two week trial that we had before at two weeks if they didn't convert they would golf like we didn't see them, whereas now we actually have them using the product and we're getting far better at understanding the signals that indicate when a salesperson needs to be involved and so often we see we are able to watch that.
Maturation process until they land and it's not unusual for us to see a customer do multiple expansions in their first 12 months. So they'll often start with maybe if it's a smallish company. They may start with a small team maybe 10 years of maybe 20 users, but then they do within that first 12 months as they bring more teams on onto the platform.
There's a.
A good split of growth and then obviously, depending on the size of the organization and depending on what's happening in the organization that could then be driven by increased planned plant upgrade pool will increase product adoption and what we also find is that we often we still typically starting date.
And often they've takes us into other parts of the business and that is a person that we just repeat every quarter in terms of.
Getting there and the example that Jan referenced that Guidewire is a really good example of us being in the Dev team into the <unk> into business teams into the executive it's a pattern that we see repeated.
Great well done congrats.
Thanks Derek.
Thanks, Eric.
Next we will hear from Matt Swanson with RBC.
Go ahead.
Yeah.
Yeah. Thank you so obviously on for for Matt Hedberg.
Obviously really great to hear about all the success in Korea. So maybe following up on Doug's question and your answer John about the analogous problems, but when we think about beyond security and Iot ops is there is there for to use case, where you see kind of those same themes that show and it's a logical adjacent cream maybe.
Finance or HR like you mentioned the talent shortage is pretty broad right now it seems like a lot of people could use your help.
There you're exactly right and you know there are infinite use cases across the enterprise and business operations, we've seen them in sales marketing our teams are pretty ingenious even in how they use paid your duty and and I think the common threat is you're talking about this shift in the way work shows up for an individual person.
Used to be structured or used to walk in and look at your calendar in the office and just go from me one meeting to the next now you know a lot of work that comes out you is unpredictable. It's unstructured it requires collaboration across teams across the business who are not you know it within swivel chair reach to where you are and requires intelligent routing.
And orchestration and increasingly more and more automation because every company I work with is looking to improve productivity over time and retain the people that they have and make sure. They can up level. Those people's work to you know the most important most innovative work and so that's where I think automation has become really important I think.
Youre going to continue to hear more about the challenge of a time sensitive customer service issues. Today, there was a public cloud outage and companies are depending Lee depending increasingly on public cloud services on SaaS products and software is imperfect and those systems that you rely on or out of your control when one of them is in <unk>.
Having a good day, you need to be able to very quickly detect that issue understand the dependencies of those services and not just respond from a technology perspective, but be able to communicate with your customers and help them understand kind of where you are in that arc and you don't want to be in the doghouse with your customers because one of them.
The services that you are subscribed to fail, then that's where pedro really being scalable and resilient and secure and always available in an environment like that is super important for instance, during the outage that happened. This morning, we saw more than eight times the event transit on the platform and didn't flinch like we we can.
Undertake a lot of pressure in our system because of all of the redundancy that we built into that product and then also allows us I think to.
Be reliable for other different types of use cases, whether it's employee on boarding and off boarding managing you know web conversion from a gross marketing perspective, or managing urgent issues in finance or other parts of the business. So the more we can do to make our platform flexible to make it easy to use to reduce the sort of developer jargon.
That's in the UX and make it easier for all types of employees, the better and automation is a big part of that.
Well, that's great and then maybe as a follow up actually as a follow up to that question from those kind of a rarity from your analyst day, you talked a little bit about automation as a new landing zone in the customers and as much talent shortage feels a lot like something you can like pushed through for a couple of months, a new kind of more of a.
Like a new normal which is another overused buzzword now or are you seeing automation being the new land into customers and what is that doing maybe from my God sales philosophy standpoint.
We are and I think it's very early days for us because the number of the automation use cases are that run deck. You know has designed it is designed for them that it has managed very effectively have nothing to do with incident response, that's obviously a place where our sales organization will naturally go but because our automation solutions start.
With an open source community theres opportunity to discover lots of different new automation use cases, and then trade up into our enterprise offerings. So I do believe that can continue to be a new land opportunity for us and you know over time part of the reason we built a cloud based automation services. So we can also build a freemium.
Funnel and I tried to buy emotion that is self surface over time, but it's not something we've done yet, but I think a great opportunity for us to build out that that that land motion in the future for automation.
Alright fantastic out it seems like a good build your product roadmap for you overtime.
Congratulations on the quarter.
Thank you.
Okay I wanted to remind our analysts that you can raise your hand, if you do have a question for the team here.
A couple and still raised mbabane, sorry, we will hear from next if you want to switch your camera on.
Great. Thanks, Thanks for taking my question.
I want to follow up on the on the previous questions John a little bit.
Barbara you're talking a lot about automation and lumpy.
I have and I think you are needed. We lost you yeah, although I don't want a muted.
But anyway, where does the lines you Wanna drove out what you're automating versus a broader automation platform. So it ops Dev ops, there's broad automation platforms and their service not as a ton of automation, you've got somebody's workflow orchestration engines would do that too.
So where do you draw the lunch day, and maybe does that like blurred you start taking over some of those markets. How should we think about how your vision is.
10 years down the road.
Our vision as the operations cloud is to take on more and more of the time sensitive unstructured mission critical work that has to happen across an organization and that is not functionally or use case specific like we absolutely intend to expand our surface area across across the enterprise and.
We specialize in that unexpected kind of unpredictable unstructured work because of our ability to be able to to diagnose it and intelligently route it orchestrated across teams and increasingly automate. The response not just the detection, where the orchestration, but that's what it really is.
<unk> point that we have always been in the automation business, we maybe didn't characterize it that way, but if you think about what we do using 625 integrations it sort of listen and see everything that's going on in the digital ecosystem to do find signal and the noise and determine whether something is a major incident about to happen or an event storm about it.
Become a major incident or actually something you shouldn't worry about and to just hit the news about not like that's a form of automation intelligently routing that work to the right six people instead of getting 100 people on a call that automation and increasingly like every time, an incident, where an event runs on the page or duty platform. The platform is capturing.
That information and our proprietary dataset learning from it and getting smarter and helping you institutionalize getting smarter as a company on how you respond.
And then increasingly like proactively prevent bad things from happening, but maybe also address opportunities in a more time effective way and more efficient way for it teams. So automation has always been a big part of of Pedro duty strategy and it's going to continue to be a very big part of where we go and I think one of the difference.
Is between us and maybe their ticketing systems and the project management solutions that are out there is that we were designed for distributed teams. We are cloud native from the beginning we inter operate with just about everything in the ecosystem, we're flexible and very easy to use. So it means you can swarm to something and give the person.
Closest to the problem the accountability and the responsibility and the visibility to act effectively in the moment and the next time, you can automate that and have the machine do it for you. So you know where were not in our P. A we're not moving into some of those spaces, you know that replace business process optimization, but I do think.
More and more of the type of work that we solve for is how work happens in the workplace now as a result of Covid and distributing work remote work et cetera, and so that's when I think about the macro environment. The way workers change has been a tailwind for us.
Well, let me, let me put that a little bit differently, you started working with partners and the basic alerting functionality, there's not a lot of services a bulk but do you think about this automation do you think about Deloitte and I think you've recently announced it was at Tata and you think about these guys.
While the incident response piece is really important the automation like this is happening to seafood and experts in the collaboration is that where they seem to focus on the interest from those guys or is it across the board and how are the partnerships are coming along.
Most of the partners that we work with are supporting customers and like Big Chunky digital transformation projects, sometimes they'll employ us as part of the cloud migration side of that solution, but sometimes it'll be around the cultural change and the change management associated with doing work a different way not relying on people and our network operation.
<unk> centre manually watching blinking lights, and escalating things et cetera. So it varies from partner to partner, but we do see that as an opportunity in the future to engage more readily with some of those more traditional systems integrators or strategy are firms that are out there.
Got it that's really helpful. Thanks, and congrats thank you.
Bye bye.
Okay folks are it looks like Kingsley cream Bahrenburg gets to come with the final question for the group today.
We see any hands go up Additionally.
Please go ahead.
Thanks for taking my question. This is Matthew on for things we crane.
You expected to see a range of NR between 118 to 124 you came in at the high end of the range here.
We believe a higher momentum here. It was a function of feature adoption or growth I would love to better understand the mix here and if it's been different from the last few quarters and the momentum there. Thanks.
Yeah. Thanks, Thanks, Ed So you know for US it's always a mix effect since that are that are driving that was obviously given just the improvement that we've seen in the adoption of the digital operations plan that's been a contributor.
We've seen an increasing number of educated customers adopt the page through the automation of the <unk> solution. So that's been a contributor but the largest contributor is still use a seat expansion. So we're not sold out in terms of uses at any customer. So every cut.
Estimate has the opportunity to deploy us into another team and that certainly gets fed by.
If it's in Dev, maybe adding to I T or security or customer service and we also starting to see customers eating a thing of the business cycle.
Circumstances. So those are the elements that actually build into that expansion within the customer base.
Very helpful. And then another angle here last quarter, you discussed some customers spending more than 500, K and a million dollars with you guys any color you want to share on these trends during the quarter help us further reconcile the enterprise or is it going to be the same answer as we got.
<unk> for the enterprise, yes, so what I will say, if we are seeing good momentum above 500, okay and above a million.
We are focusing David's attention at our key metric, which is the greater than 100, K, which grew by 35%.
Throughout the year.
Helpful. Thanks for doing.
So that's it from me and congrats on the quarter. Thanks, Thanks, a lot Ed Yeah.
Yeah.
Okay that looks like it up for questions from the analysts team Jennifer will turn it over to you for final remarks. Please.
I'd like to thank all of you for joining us today and just reiterate how proud we are of the record quarter that we've delivered and how confident and optimistic we are in the outlook going forward.
We have been involved in this business I'm in my six year and I have never been more excited about the opportunity, we really living up to the promises that we've made about becoming the platform that becomes you know the platform for engagement within our customers' environments and and this vision around the operations.
<unk> is finally coming to fruition, which is personally very exciting but wouldn't happen were it not for customers, placing their trust in us and our Daytona earns our employees who work every day to re earn that trust. So I just want to congratulate our team.
Thank you to our customers our investors and wish all of you a very healthy happy holiday and a prosperous new year. Thank you.
Okay.
Yeah.