PagerDuty, Inc. (NYSE:PD) Q4 2024 Earnings Call Transcript
PagerDuty, Inc. (NYSE:PD) Q4 2024 Earnings Call Transcript March 14, 2024
PagerDuty, Inc. misses on earnings expectations. Reported EPS is $-0.33235 EPS, expectations were $0.15. PD isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Tony Righetti: Good afternoon, and thank you for joining us to discuss PagerDuty's Fourth Quarter and Full Fiscal Year 2024 Results. With me on today's call are Jennifer Tejada, PagerDuty's Chairperson and Chief Executive Officer, and Howard Wilson, our Chief Financial Officer. Before we begin, let me remind everyone that statements made on this call include forward-looking statements based on the environment as we currently see it, which involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. These forward-looking statements include our growth prospects, future revenue, operating margins, net income, cash balance, and total addressable market, among others, and represent our management's belief and assumptions only as of the date such statements are made, and we undertake no obligation to update these.
During today's call, we will make -- we will discuss non-GAAP financial measures, which are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial measures is available in our earnings release. Further information on these and other factors that could cause the company's financial results to differ materially are included in filings we make with the Securities and Exchange Commission, including our most recently filed Form 10-K as well as other subsequent filings made with the SEC. With that, I will turn the call over to Jennifer.
Jennifer Tejada: Thank you, Tony. Good afternoon, and thank you for joining us today. PagerDuty delivered a solid fourth quarter to cap off another year of growth and substantial operating margin expansion. We demonstrated operating efficiency throughout the year and completed our second consecutive year of non-GAAP profitability. On a full-year basis, revenue grew 16% year-over-year and non-GAAP operating margin expanded by over 1,200 basis points to 13%. In the fourth quarter, revenue grew 10% to $111 million, at the top end of our guidance range. Non-GAAP operating margin of 10% exceeded the high end of guidance, with a year-over-year expansion of nearly 400 basis points. Our steady progression upmarket underpinned our solid results.
Expansion ARR, $100,000 transaction volume and average deal size each improved sequentially. And with a higher mix of ARR coming from our enterprise segment, the visibility and predictability of our business also continues to improve. We achieved dollar-based net retention 1 point above our expectation, and we see it improving in FY '25 along with total ARR growth. We added $13 million of net new ARR in Q4 and grew total ending ARR 10% to $452 million. Customers with two or more products contributed 62% of the total, an increase of 4 percentage points over the prior year. To a large extent, the growth in both metrics was driven by increasing momentum in enterprise engagements, resulting in several multi-year Operations Cloud deployments within the Global 2000.
During the fourth quarter, we gained traction within our enterprise segment, demonstrated by annual net new additions to our cohort of customers who spend more than $100,000, which doubled quarter-over-quarter. On an annual basis, our $1 million cohort increased 16% to 58. These results demonstrate the strong market fit of PagerDuty's Operations Cloud for the world's leading brands seeking to modernize their operations. ARR from both new and existing customers exceeded Q3 levels in Q4, and we remain confident in delivering accelerated net new ARR growth in FY '25. We shipped innovation across all four of our product pillars in FY '24 and started FY '25 with markedly higher pipeline across Automation, AIOps, Incident Management, and Customer Service Operations, representing a strengthening demand signal from CIOs and CTOs with mandates to protect revenue, increase innovation velocity, improve productivity, and mitigate risk.
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