Four Years as a Public Company

by Jennifer Tejada April 10, 2023 | 8 min read

Four years ago tomorrow, our team rang the bell to open the NYSE for PagerDuty’s IPO. We spent two weeks traveling to meet hundreds of prospective investors in person, sustained by a diet of Cheetos and green M&Ms, sneaker-clad walks to meetings, and unwinding with bad karaoke

We’ve grown in many ways in our first four years as a public company. We have more than doubled the number of customers on the PagerDuty platform, and nearly tripled the number of users. We’ve more than tripled our revenue from $118 million to more than $370 million. And for the last fiscal year, we achieved non-GAAP profitability a full year ahead of plan, putting us in position to run on our own steam in the years ahead. 

Four years is a long time in the software world. Our team is now more than 1,000 strong. We are now accustomed to the rigor, inspection, and cadence that comes with being a listed company. We’re more battle tested, and a little more confident for our experience, but we realize now our mission is more important than ever. 

The year of our IPO, my daughter was about to enter high school. Later this year, she will graduate. And like her, our team has cherished the opportunity to build, succeed, fail, learn, and improve with each quarter. Don’t get me wrong, we still have a lot to figure out as any growth company does, but we have taught ourselves we can manage through anything if we stay focused on our customers, hold ourselves to a high standard, and don’t confuse excellence with perfection. 

Four years on, the market and the world of 2023 both look very different too. No one could have predicted a global pandemic, or how we work would change so drastically, or that Zoom’s noise canceling feature to drown out my barking dog Maverick would be so critical on a daily basis. We’ve navigated once-in-a-generation events and the end of a decade-long bull market, marked by incredibly low interest rates. 

Now, when my fellow CEOs and I are comparing notes, we are not talking about how to prepare for an IPO. Instead, we cover a much broader range of topics, from managing our employees’ wellness and safety, ways to leverage AI in our business, to leading in a more volatile environment where “sustainable growth” and efficiency are prized. 

Here are a few of my takeaways that have helped drive PagerDuty’s success since those heady days four years ago.

The New Scorecard is the Old Scorecard

For over a decade, tech companies and our investors both optimized and were rewarded for high growth. Profitability was a visible but distant goal at IPO. When the economy shifted last year, the tune shifted too. Suddenly, the hits of the 1990s have a new resonance (beyond my high schooler’s playlists today). Teams like ours that are, as Alphaville put it in their classic Forever Young, “Hoping for the best but expecting the worst” are demonstrating you can achieve durable growth and improve operating margins while still investing in the innovation your customers demand and require.

At PagerDuty, we achieved non-GAAP profitability this past year as the result of a multi-year initiative. Our CFO Howard Wilson and I have always believed that being reliable and consistent in our results, and transparent with our teams about our financials, growth plans, and future goals, are critical. This transparency has helped our leaders anticipate and weather the ups and downs of the market. Our consistency has given investors confidence in our ability to deliver value over the long-term.

For more than two years, we have consistently achieved dollar-based net retention (DBNR) above 120%. We had a choice: burn additional cash to push that percentage higher, or lean into that performance while developing economies of scale to balance our growth. At the time, investors favored super-growth over balance, but we felt that positive operating margins and free cash flow would ultimately give our organization operational freedom, and make us more resilient. It was a somewhat boring position in a time marked by sexy high growth, highly valued offerings. Looking back now, it was the right long-term decision, and it has put us in a much stronger position in these volatile times.

Takeaway: Sometimes, boring is success, where hype trends can be hard to sustain. In both good and bad economic times consistency, reliability, transparency, profitability, and fostering a culture of innovation never go out of style.

It’s Time for Growth Companies to Grow Leaders

Elements of this scorecard feel very familiar to our senior leadership team and me. In nearly 30 years as a leader, I’ve experienced multiple market cycles and much economic uncertainty. Newer managers with just a few years in the workforce may have never worked in a cash-constrained environment, or been asked to deliver growth without ever-increasing headcount. As interest rates rise and corporate balance sheets adjust, our companies need to equip their leaders with the right skills, whether it is prioritizing efficiency, embracing automation or helping employees manage the crisis fatigue of the last several years.

Over the winter holidays, we ran a “12 Days of Automation” contest to identify areas where leveraging the PagerDuty platform could eliminate repetitive work or automate processes to save time. Proposals came from most areas of our business, ranging from procurement to marketing, all with the goals of saving time and money, and freeing our teams to focus on the highest value work. These projects have helped us build an organization-wide mindset where optimization is the first instinct, instead of simply requesting more headcount and budget.

Preparing managers to lead in any environment isn’t just an employee retention strategy. It’s a prerequisite for making sure your organization is operationally resilient. At PagerDuty, we’ve built development tracks that support our managers in developing practical and actionable skills to lead. We’ve empowered every employee to speak up when they see ways to automate repetitive tasks, and to deprioritize those activities that aren’t adding value to the business, fostering a culture of leading from any seat in the organization.

Takeaway: Invest in leadership development for your people. Skill development isn’t just a retention play. We owe our younger leaders training for the particular skills needed in this climate and mentorship to support their growth journeys. Consider training around accountability, prioritization, and leading through adversity.  

Volatility Invites Opportunity

PagerDuty was founded during the 2009 recession. Even then, our co-founders believed so deeply in their ability to address a critical problem for developers that they collectively quit their jobs to launch our company. 

I’ve managed through multiple cycles and while environments change, operational excellence in service of customer experience always endures. In fact, that operational excellence becomes more important in moments of disruption. Today’s push for efficiency means that enterprises are desperate for ways to streamline their operations, their vendors, and their tech stacks. Those are your customers – and they need your help.

Across PagerDuty’s customer base, businesses are hungry for automation, AI, and flexible workflows to create more resilient operations. We are helping them discover all the value that PagerDuty can provide. There are new companies being started right now that will help define enterprise solutions for the next decade. The ones that succeed will put their customers’ most pressing problems at the center of their plans. Push your teams to ensure that your company is delivering on that value proposition. 

Takeaway: Champion the Customer is PagerDuty’s lead value. Customers must be your focal point as your organization weathers this storm. Prioritize by asking yourself, “how important is this initiative to my customers?” Be intentional, even maniacal, and resist the urge to get too internally focused — you’ll come out more nimble, agile, and resilient. 

At the time of our IPO, I was asked how the vision for the company would change once we went public. “The vision doesn’t change,” I said. “We intend to do exactly what we’ve been doing, which is to provide the best real-time operations platform to companies to meet the growing demands of their customers.”

Four years later, the world has changed dramatically but I remain confident in our approach. PagerDuty’s mission is to help companies revolutionize their operations and build customer trust by anticipating the unexpected in an unpredictable world. We’ve gotten to this point by applying a leadership philosophy that enables us to adapt to changing environments while keeping our values central to everything we do. I’m more optimistic than ever about our future, because we continue to champion our customers, advance a platform that addresses their most pressing needs, and empower our employees to focus on the work that matters most. I encourage all my peers to consider how they can best prepare their teams to navigate whatever the road ahead brings.