I’m not sure how much PagerDuty has been talked about here, but wanted to provide some details around the company’s earnings while everyone goes bonkers over BYND and ZM today.
For those unfamiliar, PagerDuty creates software that helps companies respond to downtime on sites (like an e-commerce site) or servers in the most efficient way possible. It was founded by a former AMZN employee who realized this was something AMZN needed at the time (he’s the CTO now at PagerDuty). This is simplified, as there are more use cases.
**Q2 Revenue grew 49%
**Gross margins were 85.7% on non-GAAP basis
**Customers with annual contracts over $100K grew 51% to 242
**Dollar-based net retention was 137%. It has been over 130% every quarter since the company started monitoring it two years ago.
There are currently five different products the company offers, but there will no doubt be more in the years to come – offering lots of high-margin, low-sales-spend optionality.
But perhaps most interesting to me was the fact that two companies that have nothing to do with IT or technology in general started using PagerDuty. One was an unidentified oil and gas company (one of the world’s largest, according to the CC), and the other was Cemex. They both said the company’s technology helped monitor and resolve logistical issues much faster than was previously possible.
I’ll be buying more shares when TMF rules allow, and would love to discuss further, but have to get back to my family right now. The stock isn’t cheap – trades for over 20 times sales. Would love to hear others’ opinions on this board.
Long PD, AMZN
Closer to 30x Sales, fyi.
The CEO was just on CNBC…represented herself and company well.
My only issue with the company is trying to wrap my head around the TAM.
Similar to ESTC buying endpoint security, I think the as-yet fleshed out market could be IoT, as more and more factories and products are equipped with smart sensors to report back data on…everything.
That speaks to a lot with data…storing it, analyzing it for insights, monitoring it for issues/alerts, etc…
I put it back on the watchlist, but at 30x it is as expensive as MDB, yet not growing as fast nor with as easily identifiable (to me) TAM. So content to leave it on sidelines for now.
One plus is the mkt cap size…given so many Saul/NPI type companies have grown so rapidly, very few are in the sub-$4b mkt cap size. There are likely a lot of nuances in the alerting/monitoring space. Just like AYX is different than Tableau which is different than Talend, etc…
PagerDuty is most compared with ServiceNow, OpsGenie (owned by TEAM), and Everbridge.
Initiated a position a few days before earnings to track with skin in the game. As shared on here, I’m betting on this space with EVBG and now PD.
PD monitors machine learnings and databases and automated alerting and workflow. As the SaaS economy explodes, so does this TAM. EVBG can automate workflow and alerting, but does not have the tech chops in this space.
Like TWLO, this is an API driven solution. Gross Margins are high because sales write themselves as use cases. I see success in this DevOps focused world, especially, in this space where it is those teams who typically respond.
Those are the differentiators I see from EVBG. So I’m long on 1) growing information monitoring requirements especially on key performance SaaS solutions, 2) growing demand to automate decisions based on trends 3) building solutions that are flexible to customers vs out of the box
EVBG has a separate core base. PD May have broader cloud chops depending on company choices. Together would be interesting…hence my bucket decision.
I can’t pick a winner, so my bet is on both until numbers are clear.
49% growth at 85% Margins is good for one of the best gross profit growths in the SaaS world for PD.
I’ve initiated at 2% and will buy as I learn more.
By the way, did the same with ZM (2%) earlier this week as I divested ABMD and dipped into cash. My adds were ESTC, ZM, PD in equal bets.
David Gardner inspired me in listening to his take on Ariel Breakers to Rule Makers. Helped me get past the valuation hump and just get started in these companies.
Just a Fool