Q2 2020 Earnings Call

At this time I want to welcome everyone to the page or duty second quarter 2020 earnings calls.

Well I couldn't placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session.

If you S. Affray question. During this time simply press starts I mean, the number one on your telephone keypad. If you went out to withdraw your question press. The pound key. Thank you I will now turn the conference over to Stacy Feit Amanda. Please go ahead.

With me on today's call are Jennifer to hotter pager duties chairperson and Chief Executive Officer, and Howard will send the company's Chief Financial Officer.

Statements made on this call include forward looking statements.

Forward looking statements 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 beliefs and assumptions 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 other 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 Companys 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 recent quarterly Form 10-Q previously filed with the FCC.

Now I'd like to turn the call over to our CEO Jennifer to how to Jennifer. Thank you Stacy and thank you everyone for joining us this afternoon for our second quarter earnings call.

Pleased to welcome Stacy Feinerman, our new VP of Investor Relations to the PGT team great to have you here safety.

Q2 was another strong quarter, demonstrating our leadership in a rapidly growing category, we pioneered digital operations management.

It was our first 40 million dollar revenue quarter, driven by our multiple engines for growth new customers, new users new product adoption and international expansion.

Revenue grew 45% year over year with continued broad demand across industry verticals and geography.

We closed the quarter with 12045 total customers.

Adding 365 net new customers.

Q2 was also a record quarter for expansion of customer spending over $100000, increasing by 32 totaling 274.

This represents an increase of 51% year over year further validating our success in enterprise and mid market second we grew efficiently sustaining best in class non-GAAP gross margins of 86%. Our success is tied directly to the success of our users and our customers and we appreciate and respect the trust they place in our team and in pages.

During the quarter, we saw robust demand for our platform as well as strong adoption of our new products events intelligence modern incident response visibility and analytics.

Demand is driven by a number of macro effect Metrotech friends, Threed, which I will focus on today first the amount of time, the consumer will wait when a brand experience is not perfect is shrinking to less than three seconds.

Second digital transformation comes with the challenges of proliferation of technology apps and signal stemming from cloud computing distributed architectures and IP modernization discrete hugely complex technology ecosystem that need to be managed to deliver on customer's expectation.

And third the developer influence modern workforce requires intuitive apps that work together seamlessly daily and securely and support employees means in today's dynamic real time environment.

Traditional incident management solution don't address the challenges that come with these trends many were design prior to cloud computing in a time of sequential command and control workflows.

They often require manual integration heavy investment to deploy and can't support todays agile work environment.

Paytv is different our platform is designed for digital disrupters as well as the world's largest enterprises.

It was architected for real time cross functional work and delivers proven resiliency at scale.

10 years ago, we made a big bet the Dev ops methodology would become mainstream and created a cloud native on call management solution for Delphine.

Our bet paid off as software engineers voted with their credit card.

Today, our uncalled solution is the entry point for our platform, which has now enhanced with automation machine learning and intelligent substantially substantially separating it from other solution.

When customers add enhance products on top of the page leading platform. They gained significant value by shifting from basic coordination of uncalled rotation to proactive and automated orchestration incident management in real time operations management.

Automation is a key focus area in our new products, a public mobile payments company with the point of sale solutions used by millions of businesses uses pageviews platform across all of its engineering teams.

This quarter the company added events intelligence, which combines machine and human response data using machine learning to intelligently group alerts and automatically route them to the right team.

As a result, the customer has reduced incidence by 42%.

Saving hours of unplanned work, improving customer experience protecting revenue and reducing operational costs.

I'd group, a global Fintech leader in derivatives also adopted event intelligence this quarter, reducing their alerts by 58% and thereby reducing the number of disturbances employees, we estimate their projected annual savings to be over $500000.

We recently commissioned our first real time work study, which revealed that 51% of executives and employees find out about incidents from customers themselves.

When they complain or tweet about a bad experience.

This causes hours of unplanned stressful work, a small team scrambling silos to address each incident.

Our modern incident response solution addresses these problems by automatically detecting issues and intelligently orchestrating cross functional team response, helping teams to ensure a better customer experience.

I test market is it $26 billion public global information company, providing data insight and software principally across three major industry energy and natural resources.

Financial services and transportation this quarter I test market were pleased to point solution that did not feel effectively with with Peter de platform. The company is deploying our platform and modern incident response across nearly 1000 users.

It's also important that companies can determine the business impact of unplanned work and customer impacting incidents on their bottom line.

According to our survey the costs of unplanned work is increasing and 86% state that this results in less time to innovate teams faced burnout lost productivity and less development time, which in turn impacts competitiveness and create brand with.

Often companies cannot understand real time business impact of incident, our visibility product translates the immediate impact of incidents like outages and disruption in his business outcomes no other product on the market consolidates, a real time holistic view of operation and correlates people technology services and business impact in the moments that matter.

Peter duty analytics provide operational scorecards and customizable dashboard.

So companies can apply a proactive approach to managing digital operation based on how teams have historically responded to major issue. The scorecards provide a curated approach to improve team health technology service health and business outcomes like total cost of incident response costs of the business and predicted people metrics to detect respond to the team.

This is an industry first and a significant differentiator for pages.

We are excited by the broad applicability of injuries platform. This quarter, we discovered a number of new use cases, where customers have a platter platform.

A late stage high growth Fintech company that facilitates digital payments for millions of businesses worldwide uses pager duty across many of his team.

Having started with developers the then expanded their users to legal security and payment operations team.

The payment operations team, he's pager duty to coordinate with global banking partners and real time, ensuring successful transaction.

Physical security teams are on page or duty, so real time response to physical security issues.

Legal teams managed time sensitive request for law enforcement and stuck up teams are on page or do you need to monitor monitor security risk and ensure compliance.

Global recognized leader in GPS navigation and wireless devices uses page really to monitor its emergency communication devices were complete reliability is a life or death matter.

The company previously used a basic monitoring service and switch to page or do you do to reliability concerns.

After recognizing improved reliability scale and valued PGT provides the company has now expanded its use of page beauty to its digital transformation initiatives.

Another notable new use case led by our pager duty Dot, Oregon initiative with code for America, and nonprofit that focuses on reforming government services to make them simple easy to use and accessible to all Americans.

They are currently using pager duty to support their guest how fresh program, which improves access to the supplemental nutrition assistance program for snap more commonly known as food stamps.

Get count fresh has digitized and streamline the process for applying for snap, reducing the application time from 82% from 45 minute eight minutes and it's helped over 1 million, California and gain access to <unk>.

From a product perspective, this quarter, we launched a number of new capabilities that help our customers more quickly and accurately respond to issues and opportunities that impact revenue brand and customer experience.

In July we launched business response, which advances traditional status page capabilities. The responders can seamlessly update business stakeholders and business service impact and real time recovery progress in an intuitive fully automated way.

This allows responders to drive faster resolution and enable stakeholders to proactively manage customers and.

Similarly in Q2, we enhanced our search capabilities to provide improved context for I'd and Dev ops teams. So they can more easily navigate large organization to find the right subject matter experts team and escalation policies during incident and respond faster in the moments that matter.

To further build on our market leadership, we continue to deepen our leadership bench during the quarter, we appointed a new CMO Julie guaranteed Julie comes pager duty, having been large marketing teams at companies, including Super Dropbox, Yahoo, and look out and now leads our efforts to scale, our brand and continue to build our demand generation and growth markets.

As we expand our business, we will continue to invest proactively in leadership to support our growth in the coming quarters, we anticipate adding a chief people officer, and a chief revenue officer.

Overall, we had another strong quarter and I'm proud of what our team has accomplished to benefit our users customers and partners. We are encouraged by our continued strength in enterprise and rapid adoption of add on products.

We continue to see growth in expansion geography use cases, and new products aided by our self serve and high velocity sales motion.

Finally, I'd like to highlight our fourth annual user conference Summit, which takes place on September 20, Threerd through the 25th we will be hosting over 1000 developers and technology executive.

We are excited to host industry leaders, including Geoff Lawson from Trillium, Eric Yonathan, do Cynthia daughter of Adobe and Investor Andre Iguodala as well as breakout sessions led by leaders and practitioners innovating with the page.

We look forward to an action packed week with our community, including new product innovation and best practices, we can all learn from.

With that I'd now like to turn the call over to our CFO , Howard who walk through the financial results Howard.

Thanks, Jonathan.

We are pleased with our second quarter fiscal 2020 result.

Our revenue for the second quarter grew 45% year over year to $40.4 million, beating the high end about guidance.

New customer acquisition, new product adoption and healthy growth in international geographies, all contributed to our strong results.

non-GAAP gross margins remained strong at 85.7% and we exceeded our non-GAAP EPS guidance by two same coming in at a non-GAAP net loss of seven cents per share.

We ended the quarter with 12045 customers up 15% year over year, and 274 customers with an annual recurring revenue above $100000.

Up 51% year over year, demonstrating our strong growth in the enterprise segment.

One such customer is a global Fortune 500 company, which provides global human resources management software and services.

We landed the seven second multiyear deal with them this quarter.

They use pager duty across multiple teams, both Martin Dev ops team and a traditional tea and knock team.

They use page duty to improve communication across teams increased development productivity and increased total visibility into the held for full services.

Other notable wins in the quarter included companies in the highly regulated financial services sector with scalability and reliability of both sexes in deepening the relationship with us.

As Jay noted our platform was built for digital Disrupters as well as the world's largest enterprises.

These expansions are proof points of the strong demand for real time operation.

I don't have the base neighborhood revenue retention for the quarter was 132% in the past eight quarters on revenue retention has been above 130% and while we expect this number to vary quarter to quarter, 132% is a strong member for both the industry and our company.

Our international revenue grew 59% year over year, and now represents 22% of our total revenue.

We continue to be excited about 30 expansion, if it's in EMEA and a P.J. and our revenue growth in these regions continued to be strong.

In the quarter, we hosted to develop and use the conferences, London connect and Sydney.

I was pleased to attain London connect with our customers shape. These stories with several hundred attendees.

One of those was month type thing.

Monza is a disruptor in the financial services industry and has built a mobile only bank.

The business is 100% dependent on digital services.

And they use pager duty to support a seamless experience for the more than 2.8 million customers.

[noise], Cambridge cognition is another customer that was featured at London connect using our platform for end use case.

Clinical work.

They are a digital neuroscience company developing validated software technologies to enhance research into brain health and mental wellbeing.

In addition to using pager duty to monitor the health and status of its IP infrastructure. The company utilizes page beauty to help monitor suicidal ideation.

Immediately notifying conditions and sponsors to take action to prevent so palm in patients.

The need to acknowledge the coal and using escalation policies ensures that the message is action.

With that I will turn to the detailed financial results I'm, providing these results on a non-GAAP basis.

Our GAAP financial results, along with a reconciliation between GAAP and non-GAAP results can be found in our earnings release.

In Q2, non-GAAP gross margin was 85.7% and was in line with the second quarter of last year.

Our cloud native architecture, Devops approach to production and programmatic approach to customer support and success drives our efficient operating model.

Our strong gross margins create operating leverage and allow us to make investments in the long term growth of business.

We have run a business on gross margins between 84, and 86% and we expect gross margins to stay within this range for the remainder of the fiscal year.

Turning now to operating expenses.

While we remain focused on scaling the operation team provided a bridge, we anticipate continuing to make investments for growth.

Over the long term, we anticipate that our revenue will grow at a faster rate than our total operating expenses, which will improve operating margins over time.

Operating expenses this quarter reflected anticipated investments in expanding our sales force and go to market programs.

Second quarter, non-GAAP operating expenses were $41.7 million compared to $28.1 million a year ago.

This 48% increase year over year was driven by investments made in line with our go to market strategy continued product innovation and infrastructure to support being a public company.

non-GAAP research and development expenses for Q2 were $10.2 million compared to $7.4 million in the same year ago period, representing an increase of 38% year over year.

Innovation has been and will continue to be a top priority for us as we continue to move up the value chain in real time operation.

We expect R&D to increase for the remainder of the year, but remained roughly the same as a percentage of revenue.

non-GAAP sales and marketing expenses for Q2 were $21.5 million and grew by 49% compared to Q2 of fiscal 2019.

As we discussed on our Q1 earnings call. We made early investments in the first half of the year to increase our sales capacity, we expect to expand our sales force more modestly for the remainder of the year and over time, we would expect to see improved operating leverage as our subscription revenue grows.

From a marketing perspective, we will host our annual industry Conference page Beauty summit in September which is a significant investment in the quarter.

We will be making additional investments in Q3 program spend to promote top brand, which includes above the line advertising and this will continue into Q4.

non-GAAP general and administrative expenses for Q2 were $10.1 million for the quarter.

In that and increased 60% year over year as I mentioned in our Q1 earnings call the year over year growth in DNA was driven by investments in headcount and systems that we made in anticipation of becoming a public company.

DNA expenses in Q2 was sequentially flat relative to Q1 and decreased as a percentage of revenue, we expect gn expenses to increase slightly over the remainder of the year, but to continue to decrease as a percentage of revenue.

Our non-GAAP operating loss in the quarter was $7.1 million compared to a loss of $4.2 million in the same quarter last year.

Our non-GAAP operating margin was negative 17.7% in Q2 and negative 15.2% in the same period of last year.

The decrease in operating margin is largely due to the investments in DNA to support becoming a public company.

Over the longer term, we expect improvements in operating margin.

non-GAAP net loss for the second quarter was $5.3 million or a net loss of seven cents per basic share compared to non-GAAP net loss of $3.8 million or a loss of 18 cents per share in the second quarter of last year.

Turning to the balance sheet, we ended the quarter with $341 billion in cash cash equivalents and investments up $213 million from the end of the fiscal year 2019. This was primarily driven by proceeds raised benign initial public offering lucky all fit our year to date operating losses.

We generated 2.2 million in operating cash flow in Q2 compared to having used $4.7 million in the prior year, primarily due to timing in working capital changes.

Free cash flow was $1.3 million in Q2 compared to negative 5 million last year.

Free cash flow margin was positive 3.3% compared to negative 18.1% from Q2 last year.

In the second half of the year, we obtaining a number of capital expenditures related to our office build out.

And in the short term, we don't expect positive operating cash flow positive free cash flow.

While we expect to make continued progress towards sustainable free cash flow in the long term it may not be in a linear trajectory given period to period fluctuations in billings and working capital and capital expenditure as we expand our us and international offices.

Moving on to guidance.

For the third quarter fiscal 2020 and the full fiscal year 2020 .

Revenue is expected to be in the range of 41 and a half.

Millions, who 42 and a half million dollars for the third fiscal quarter.

And would see up full year fiscal 2020 and in the range of $160 million to $264 million.

non-GAAP net loss per share is expected to be in the range of nine to 10 cents for the third fiscal quarter and in the range of 36 to 237 cents for the full fiscal year 2020 .

Bottom line full costs include the impact of the cost of our user conference in Q3 and program spend four above the line advertising.

Basic shares outstanding for Q3, and the full fiscal 2020 are expected to be 76 million and 65 million respectively.

With that Jennifer and I are happy to take any of your questions operator.

[noise] and we will now open up the last question. If you like to ask a question press Star one on your telephone keypad and please limit your questions to one question and one follow up question and we'll pause for just a moment to compile the Q and a roster.

[noise].

Our first question comes from Sterling Auty with Jpmorgan.

Hi, guys.

So you guys.

Net retention rate kind of came down.

It does fluctuate varied quarter, but trying to see if you know pricing is kind of becoming an issue with the competition and how the level of expansion deals looked in the quarter versus the last couple of quarters. Thanks.

Yes, hi, Sterling so in terms of.

Dollar base net retention rate 132 number is 32% is a strong number for our industry and for our company and we do expect to see that fluctuate from quarter to quarter.

A couple of points to note with respect to Q2, we did see.

A couple of our primary competitors churn or downgrades within the quarter and I think one other characteristic is that this was a quarter for us of intense hiring in fact, we from a sales team perspective, we have a high proportion of our sales force ramping in this quarter compared to prior years.

As we frontloaded our hiring in each one.

Got it thanks, Thanks for taking the question I appreciate it.

And our next question comes from Matt Hedberg with RBC capital markets.

Hey, guys. Thanks for taking my questions.

Jim.

On the topic of new product attach you've launched a number of products over the past year, you talked about a number of on this call with a couple of examples I'm curious when you look at these four new products is there one that we should be keeping an eye on more in terms of attach or just sort of overall demand from an add on perspective.

Hi, Matt good afternoon.

We were really encouraged by the new product adoption that were seeing.

Eventually intelligent and modern instant response in particular are products that are sort of the natural next step for a customer that is already on invaded there on holiday environment is looking to be on improving their response to becoming more proactive and more predictive by leveraging the mark and automation and we also see that some of our products to more senior persona, whereas other other products to sort of you know all of the developer and operating community.

They they are different horses for different courses, but the next sort of logical step I think for our customers as they add on products is modern incident response and intelligence.

That's great and then and then Howard one for you I know you talk on we've talked a lot about trailing 12 month billings was probably the best indicator.

But calculated billings still I think it's I think it accelerated sequentially looks like deferred revenue was pretty strong. This quarter can you can you remind us again, how we should think about calculated billings given your monthly contracts and the fact that a lot of your customers.

Co term deals.

Yeah, well, thanks, Matt obviously, we pleased when you see some acceleration.

To your point.

We do have a few items that do create some fluctuation in that which includes the fact that we do have 20%.

Although revenue coming from monthly customers, who on a month to month arrangement with us and then because of the nature in which we contract with.

Annual customers initially huvane will total him and so in a shorter period billings associated with those so.

We do tend to look at it intends on a trailing basis to get some sort of view because that helps balance out those fluctuations, but again, it's one of those that does move around because of these factors that I mentioned, including the seasonality of our renewal.

Great. Thanks, a lot guys.

And our next question comes from Rob Owens with Keybanc capital markets.

Yes. Good afternoon, just wanted to drill down a little bit it's again into the net renewal rates.

I didn't hear you say churn or downgrade during the quarter of a couple of customers would love a little more clarity on that and where you are seeing success with the span expansion can you help us understand how much of that is seat based versus maybe product based at this point.

Hi, I'm going to take that question, Rob It's nice to hear from you. So I just want to clarify what Howard alluded to was we had a couple of competitors that turns off of our Oh I'm sorry.

Yes, which impacted and you know in a business like ours, you're always seeing some customers come and go but our churn numbers still remain best in class and we're particularly proud of the expansion that we've seen in enterprise, where this quarter in particular, we added 32 customers spending over 100 K. with us.

I think you know I'd also would just would just point out that we're seeing that we continue to see strong expansion user expansion across teams and new use cases and that drives the majority of our growth, but we're excited about the new product adoption that we see I would just underscore what we said last quarter, which is those new products are still early we don't guide on a revenue breakdown by those new products are sure that information, but we are seeing customers.

Very interested and excited about taking their operations maturity to the next level started using machine learning and automation to their advantage to reduce the cost and time and risk associated with.

Well, we think of as modeling.

Great. Thanks for the clarification there on the competitor churn number two with the success you're seeing internationally can you talk about go to market overseas and is there any unique localized competition or anything different from a competitive landscape. Thanks.

I didn't go to market is a lot like it is in North America. Most of the accounts, we engage with our Greenfield and Thats the case across our customer base, while we do see some competition from time to time I'd emphasize that we still really see is a large and nascent market and a lot of customers are really just thinking through how to improve the time. It takes for them to respond to demanding customer requirements. When their technology is getting more complicated.

We're really proud of the growth that we're seeing with very new teams in both EMEA and Asia. Jay those teams have only been in market for about two years and some of the most interesting use cases are coming out of out of the market.

Again I would also just reflect that in international very similar to North America. The the adoption of our platform is very horizontal it we see it across just about every single vertical and across different kinds of team.

Great. Thanks, Jennifer.

And again to ask a question press star followed by the number one on your telephone keypad. So that star followed by the number one to ask a question.

And our next question comes from Sanjay Sen with Morgan Stanley .

Yeah, I just had a higher I guess Doug.

A strategic question.

Hi, Jennifer if you will so we think a lot of.

Call. It the IP operations management space, a lot of consolidation on Sparks made a couple of acquisitions in the performance monitoring decided arm application performance monitoring side a lot of these guys are your partners, but in terms of the longer term strategy is the partnership strategy with the performance monitoring vendors and and other parts of the ecosystem is that the right way to go or do you just start to bring in more and more and subsea more that functionality into the pay TV platform as you try and pursue a platform player in the enterprise just want to get your looks like sort of higher level thoughts there.

Thanks for the question Sandy what I would say is that as we see consolidation in that particular part of the market. It really strengthens our position because it becomes increasingly important to our customers to have a central independent third party correlating events from all the different points and monetary environment within the ecosystem and that's not limited to ATM. It includes security ticketing physical environments et cetera, and so you're correct that we do partner with the ATM providers and in fact, most of them like data dog, new relic app, the Cisco our customers as well. So there is a very strong complements and the way to think about it is.

We consume those signals long term, we're not just leveraging what's happening right now in the moment, we're leveraging 10 years of data and the platform that helps us to really correlate and make sense of whats happening regardless of how complex or how distributed the environment is the second thing that I would say, which is very different from the approach of the ATM providers or traditional monitoring a lot providers is really focused on automating and intelligently orchestrating the people and the work itself. So every time an issue or an opportunity runs on the platform the platforms learning from it and then providing more proactive.

Predictive capability to the teams. The next time around and that continues to be I think really important part of our long term strategy. The fact that our focus is actually on the people and helping them orchestrate engage effectively even though their organizations and the eco system is getting more complex. So we continue to see ourselves as being central in that ecosystem as opposed to bias towards one particular type of capability or sub segment or not.

Understood and maybe just to stick sticking with that we'll see a sort of longer term themes as customers kind of move more and more to these container based micro services based.

Kubernetes standard type application architectures, how does that impact your duty.

From a from a from a growth and positioning standpoint in your view.

So containerization, so far has been great for patients because it actually creates another layer of complexity to monitor but it doesn't replace some of the legacy environments that our customers have to contend with on a day in and out basis, and I would say, even with some of our younger disruptive customers because of the pace at which technology and architecture has changed they all have to deal with some kind of hybrid mix of native new cloud centric technology on Prem traditional legacy technology and the complexity in the change that accelerates as you have people doing 10 20 hundreds of deployed today make it impossible for humans to manage so containerization has actually been a good tailwind for us alongside of cloud and and the broader sort of umbrella of digital transformation, where you're trying to do more you're trying to shift your investment to innovation and application development and yet, though the the complex technology sitting behind it isn't getting any easier.

To manage there is that kind of a different set of challenges I would say that come with its containerization and the distribution architecture.

Great I appreciate the thoughts on her.

And our next question comes from Bhavan, Suri with William Blair.

Hey, guys. Thanks for taking my questions and nice job there on the on the quarter I guess I wanted to chat a little bit on the penetration opportunity the core product.

If I think about the core on call management product and you think when you look at the seat count perspective within average customers.

I'd love to sort of get an idea how you think about sort of the remaining memory for additional seats within larger customers. You've got some customers. They are pointing up more than 20000 seats and you think about sort of that spreading I'd love to sort of think about how you guys think about attacking that opportunity and what the size that opportunity within the existing base might be.

Yeah, we really think about that is I think the the traditional starting point for most of our customers in developer of an IP teams and then you see this natural expansion organic expansion into related organizations like customer support or security operations et cetera. We don't have a single customer that is sold out all of our customers still have employees that have real time responsibilities and deal with complexity in their day to day operations that are not on page 30. So we think the opportunity continues to be significant within our existing base on our core products as well as you know.

The opportunity to acquire new customers and expand through add on products. What I would say is we continue to work very hard at making our products simple and easy to use. So that you don't have to be a developer who can script to kind of understand how it works that includes things like ruling jargon from the lie.

And also articulating the value and how our products can be leveraged in applied to different use cases than sort of what's typical as opposed to sort of allowing customers have to figure it out for themselves.

Got it got it that's helpful. And then I know someone asked about competitors a little bit of consolidation, but I wanted to touch on some of the AI ops entrance rates are you seeing some of the monitoring guys are coming in so guys like dynatronics of Oak. Other platforms, you have to work with more third party systems and data sources and I addressing sort of the AI ops opportunity I guess are you seeing that a customers at all do you see any of these new AI ops kinda entrants in that space are you seeing monitoring venture entrance on deals or is that still sort of still pretty much. The traditional guys or guys that have been acquired and consolidated like if it drops or whatever.

So first of all most of our deals are uncontested is still a lot of greenfield, where we're replacing foundries and what that channel yes, yes.

Second of all I would say that we're not seeing.

As a as I can in a competitive way at all and in fact, all the people that you mentioned Asia duty and are beginning to leverage staging for things like event management urban intelligence. So.

I don't see them coming that way and I think whats important is there's quite as technology effort to not just consumers signal, but then correlate that signal we need very strong data set to work from in order to make sense.

A very complicated set of events that in a traditional ATM environment would each look like their own separate incidents and would be pushed to as a single silo team, whereas with pager duty event intelligence and modern incident response as those events come together through our platform. They are consolidated into a single related event and then orchestrated to maybe a handful of people instead of 100 people across higher 16 workout. So the workflow is different and our ability to orchestrate people attend orchestra team and intelligently routes insight and action direct to the right team the right subject matter effort. Our subject matter expert is very differentiated the last thing I'd mention is visibility, where we talked about helping people in the molded see understand the context of what's happening in business for instance changes in transaction volume or changes in shopping cart abandonment.

At the same time, they're experiencing and complicated technologies.

Which helps responders prioritized immediately on technically the things that are the most important for the business in the home and that again is quite different relative to the area.

Pardon.

That was super helpful. Thank you guys and nice job there thanks for taking my questions.

And our next question comes from Ricky Chiller here with da Davidson.

Hey, guys. Thanks for taking my questions I wanted to start by drilling down on the 100 K. ads.

Not in our 32 and getting it to 74 in the quarter, maybe help us understand what what was that just a result of.

Better execution in terms of sales and go to market.

Or or any other contributors there and then maybe directionally help us understand was that mostly existing paging any caution or is that just expanded within both products in seats are or were some of those net new customers that weren't Peter DDIC customers before.

Thank you I'll answer to your second part of your question first is easier to remember the customers over 100, K. is a mix of existing customers and net new customers, but the majority are existing customers that are expanding within their dev team or two new teams or new use cases.

And or new products within within their relationship with us.

And if I think about what's driving the strength in that segment I think one of it is just market demand from enterprise and Midmarket.

And the fact that there are not other scalable resilient secure platforms available to them. Some of those customers have tried point solutions or internal solutions and not been successful. The other thing I would say is that some of the macro trends that we're seeing which is most of these large companies that even.

Large disruptive midmarket players are trying to move very fast there, they're investing heavily in digital transformation, which we facilitate readily a lot of them are involved in.

Cloud adoption or cloud migration and those tend to be a tailwind that really support that kind of expansion and then last I would say I think I think we are building credibility.

Because we are proven in more than half the fortune 100, and over a third of the fortune 500, as as delivering the enterprise scale and enterprise grade offering. We've also had feedback from a lot of these customers around.

How excited they are about the roadmap and the fact that as their operational maturity advances there is somewhere for them to go.

Got it that's really helpful. And then just and thinking about some of the early positive reception you've had with with that intelligent incident response and some of the other ancillary product I mean have you have you given thought to at some point in time I know, Jennifer you said not disclosing revenue breakdown or anything like that but maybe even something like attach rates or attach rates for even just the 100 k. customers feel that once a year or at the analyst day or something just as I I think what gets people really excited is when the platform part of the story really starts to take off and clearly the pieces are in place, but any kind of early signs and all that so I think that would be helpful. But just wanted to get your perspective on that thanks.

Hey, guys I appreciate your feedback there at this point in time, we don't have an intention to share that data again I think these products are early we released event intelligence into the market last summer. So its been out in the market in just a year and the other products of all followed and.

Just earlier this quarter, we release business response, which allows customers to not just manage their technology incidence and issues and opportunities, but help business leaders drive the corporate response, if they need to engage go to market to get ahead of challenges with their customers or legal or PR and so it's pretty diversified offering and I think for where we are right now we don't intend to continue to share attachment data.

Okay got it understand thank you so much.

And there are no final questions at this time I want to know from the conference back over to management for closing remarks.

Okay.

Thank you everybody for taking the time to join our call and thank you to the entire BG customer and user community and that team for another solid quarter.

We look forward to seeing many of you at our upcoming summit later this month, thanks, very much and have a great night.

That concludes today's conference call you may now disconnect.