Oscar Saavedra

Oscar Saavedra asked about the Q4 growth guidance (1% at midpoint) in relation to pipeline visibility for the big renewal quarter versus conservatism around the timeline for the usage-based model offsetting seat pressure, and how improved logo retention squares with the downtick in customers spending over $100,000 in ARR.

Answer

Howard Wilson (CFO, PagerDuty) stated that the Q4 guide factors in renewal visibility, and while the new pricing/packaging model will mitigate contraction, it's not expected to have a major immediate impact in Q4. Jennifer Tejada (Chairperson and CEO, PagerDuty) attributed the downtick in high-value customers to downsells at the larger end of the market, noting that customers are expanding at a similar rate but with smaller, more cautious expansions.

Oscar Saavedra asked about the Q4 guidance, specifically how much of the 1% growth at the midpoint is based on the pipeline for the upcoming large renewal quarter versus conservatism regarding the timeline for the usage-based model to offset seat pressure. He also questioned how to reconcile improved customer logo retention and fewer absolute downgrades with the downtick in customers spending over $100,000 in ARR.

Answer

Howard Wilson, Chief Financial Officer of PagerDuty, stated that Q4 guidance incorporates visibility around renewals, which is PagerDuty's largest quarter. He expects new pricing and packaging to mitigate contraction and set customers for growth, though not a major impact in Q4. He noted early engagement and targeted efforts to improve adoption, anticipating some Q3 patterns to persist in Q4 with stabilization in customer downgrades/churn. Jennifer Tejada, Chairperson and CEO of PagerDuty, attributed the downtick in $100,000+ ARR customers to the impact of downsells at the larger end of the market, noting that expansions are occurring at a similar rate but are smaller and more cautious.

Oscar Saavedra from Morgan Stanley asked for an update on the performance of partners in terms of lead and pipeline generation relative to internal expectations. He also inquired to what extent the full-year guidance assumes an improvement in this partner contribution.

Answer

CFO Joo Mi Kim expressed satisfaction with the progress on the partner side, noting increased pipeline and deal sizes relative to the direct business. However, she clarified that the current guidance prudently assumes no significant improvement from today's levels, essentially a 'stay the course' approach, given the macroeconomic uncertainty. She expressed hope for meaningful improvements once the macro environment improves.

On behalf of Morgan Stanley, Oscar Saavedra asked for help reconciling the factors influencing the 2025 guidance, including budget scrutiny, a stable 103% NRR, and the CRO transition, and questioned the level of conservatism in the forecast.

Answer

CFO Joo Mi Kim confirmed the guidance of 6% to 8% growth incorporates all those factors. She clarified that the forecast is based on current trends, which include the assumption that the net dollar expansion rate will not improve from 103% and that the light new bookings performance from Q4 will persist. She acknowledged potential upside from new products like ETM, but stated the timing of that impact remains uncertain.

Sought to understand the confidence behind raising full-year guidance and whether an accelerated pace of maintenance-to-subscription migrations was a contributing factor.

Answer

Confidence in the raised guidance comes from strong H1 performance and stable demand from existing customers. The growth in subscription is driven by the geographic expansion of the conversion program across all regions, rather than an acceleration in the pace of individual migrations.