Guidance Reduction and ARR Growth
Q: Why was revenue guidance cut but ARR growth confident?
A: Revenue guidance was reduced by just under $10 million due to timing issues from larger multiyear, multiproduct deals causing less linearity and increased seasonality. " However, ARR guidance remains unchanged, expecting growth above 10% for the full year and DBNR at 107%, with acceleration in the back half. "

FY26 Outlook and Seasonality Trends
Q: How should we view fiscal '26 and ongoing seasonality?
A: While specific guidance for FY '26 isn't provided, we expect ARR growth above 10%. " The seasonality from focusing on enterprise customers is likely to continue, with back-end loaded quarters and the fourth quarter being the largest. " Multiyear deals reduce churn risk, strengthening our foundation for future growth. "

Changes in Guidance and Confidence in Pipeline
Q: What's different in guidance regarding large deals and SMB churn?
A: The guidance adjustment accounts for delays in professional services revenue, removing a couple of million dollars this year. " We're seeing less linearity and more revenue recognized later due to longer sales cycles. " However, we have strong visibility into the pipeline, with AIOps revenue up 20% and Customer Service Ops up 50% year-over-year. " SMB represents less of total ARR over time. "

Expense Efficiency and Margin Outlook
Q: Thoughts on further expense efficiencies and margins?
A: We've improved productivity through our location strategy, technology use, and internal AI. " Future efficiencies will focus on G&A and sales and marketing, while maintaining high investment in R&D to support innovation. "

Factoring Longer Deal Cycles and Renewals into Guidance
Q: How are longer deal cycles affecting guidance and renewals?
A: We've adjusted guidance to reflect longer deal cycles and potential delays. " Sales teams are incentivized to close deals within the year, improving pipeline confidence. " Multiyear renewals have reduced available ARR to renew in Q4, allowing better management of retention risk. "

Trends and Churn in SMB Segment
Q: What's the outlook for SMB ARR and churn?
A: SMB continues to be a headwind, with elevated churn and downgrades for four consecutive quarters. " While we see signs of stabilization, volatility remains, and we expect growth to come mainly from enterprise and mid-market segments. "

Impact of Increased Incidents on Growth Opportunity
Q: How do more costly incidents drive growth for PagerDuty?
A: Rising incidents are driving higher-level conversations with CEOs and boards. " Leaders recognize the financial impact, leading to potential budget prioritization for our solutions. " While too early to see in the pipeline, it's evident in customer discussions. "

Competition in Incident Management
Q: How are win rates in incident management versus a year ago?
A: Competitive dynamics haven't changed significantly. " Price sensitivity has increased in SMB and mid-market, affecting growth and renewals. " Our AI-based platform demonstrated resilience during the 1,400% surge in incidents on July 19 without disruption or cost surge, highlighting our strength. "

Evolving Competitive Environment and Enterprise Focus
Q: How is competition affecting enterprise strength and SMB softness?
A: Most competition is in SMB and mid-market, with competitors lacking scalability and AI capabilities for enterprise. " Our performance during recent outages reinforces our competitive advantage in enterprise. "

Flexible Enterprise Pricing and Expansions
Q: How is flexible enterprise pricing impacting expansions?
A: Customer feedback is positive, enabling significant expansions like a 7-figure North American bank adding AIOps and Customer Service Ops. " Our consumption-based pricing in AIOps supports customer growth across products. "

Impact of Increased Incidents on Future Pipeline
Q: When will increased incidents reflect in the pipeline?
A: We're not yet modeling new pipeline from recent incidents. " Awareness is growing among CEOs and CFOs about the cost of incidents, potentially leading to future deals. " Timing is uncertain, as customer adoption varies. "

Longer Sales Cycles and Impact on Growth
Q: How do longer sales cycles affect growth?
A: Longer cycles lead to larger, multiproduct deals that are beneficial for long-term growth. " The guidance change reflects timing shifts, but we're confident in accelerating ARR and achieving 107% net retention. "

SMB ARR Expectations and Closing Remarks
Q: Should we expect SMB ARR to continue declining?
A: We anticipate growth coming mainly from enterprise and mid-market, with SMB remaining a headwind. " We're focused on surpassing 10% ARR growth, improving efficiency, and building long-term customer relationships. "

Confirmation of Revenue Guidance Reduction
Q: Will revenue happen later due to longer cycles?
A: Yes, aside from professional services revenue reduction, we expect net new ARR to achieve over 10% growth by year-end, with revenue recognized later due to longer cycles. "