PagerDuty, Inc. (NYSE:PD) Q3 2023 Earnings Call Transcript

Sanjit Singh: I appreciate the thoughts there. Congrats on the quarter.

Jennifer Tejada: Thank you.

Operator: Okay. Next we’ll hear from Matt Hedberg at RBC. Matt, you can go ahead.

Matt Hedberg: Sure. Thanks for the question. Jen, a go blue.

Jennifer Tejada: Go blue, did anybody seen my

Matt Hedberg: Okay, that was exciting stuff for a big, kind of a fan, certainly fun to see, so congrats on that, congrats on the quarter. Howard, maybe a question for you, could you tell — good results I think in a really challenging environment. Could you talk a little bit more about the linearity of the quarter? And maybe how is November trended thus far versus maybe past Novembers?

Howard Wilson: Yes. So the pattern of linearity when we look through Q3, it was not unlike what we saw in Q2. I think some of the factors that we saw that we referenced even in our call on Q2 played out in Q3 in terms of just some of the decision-making processes within the customer base, took a little bit longer, but there was at least a steady momentum as we move through the quarter, particularly in the last month of the quarter, so that was pleasing. I think the thing that really stood out for me was that our customers are doing so many different expansion transactions with us whether it’s adding users or adding product. So we had a record number of expansions for the quarter, but those tended to be smaller and that really indicated though that our customers are applying a level of consideration to the purchases they make, but we’re going to charge durable growth, they continued to make those purchases and continuing to grow with PagerDuty.

So that was for us was a really positive sign and we expect that trend to continue.

Matt Hedberg: Got it. Maybe just one other guidance question. I appreciate the billings guide for Q4 and normalizing for the multiyear prepay. Yes, I guess thinking more about the assumptions in your guidance, are you assuming that we kind of get a December and in your case January budget flush? Just sort of curious, are you assuming things kind of stay the same from a demand perspective? Just a little bit more perspective on that?

Howard Wilson: Yes, I mean we typically do see that for companies with calendar year ends that there is a certain amount of increased activity in December, so December is never a quiet month for us, even with the holidays and January again ends up being for those companies that are able to gain access new budget tends to also create a fair amount of momentum for us. We’re still expecting that trend to continue even within the current macro environment on how that plays out exactly in terms of what people are prepared to spend and the size of checks they’re prepared to write, that we’ll have to see. But certainly our pipeline is really strong coming into Q4 and we certainly are seeing that customers interest particularly in our platform as a mechanism to be able to help them reduce, spend or for them to be able to be more efficient or consolidate spend across a number of niche vendors is coming to the full.

Matt Hedberg: Got it. Thanks a lot. Congrats guys.

Howard Wilson: Thanks. Thanks, Matt.

Jennifer Tejada: Thanks, Matt.