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How PagerDuty Is Growing Its IT Operations Services Business

PagerDuty reported strong Q4 and full-year growth as it continues to build out its platform with AIOps and incident response workflows.

PagerDuty's business is growing thanks to the accelerating demand for automation and AIOps.

The company reported its fourth-quarter fiscal 2022 financial earnings on March 16, with revenue for the quarter coming at $79 million and $281 million for the full year, both up by 32% year-over-year.

PagerDuty got its start with IT operations monitoring technology that provide alerts to IT staff about issues. Over the last decade, the company has expanded its offerings with AIOps, incident response, and IT operations workflow technologies.

PagerDuty is growing for a number of reasons, not the least of which is that its customers are buying more than one of its products.

"Exceptional results in Q4 were driven by an increase throughout the year in multi-product adoption," PagerDuty CEO Jennifer Tejada said during her company's earnings call. "More than half of our annual recurring revenue now comes from customers utilizing two or more PagerDuty products."

The Driving Force Behind PagerDuty Growth in IT Operations

Among the reasons why there is increased demand for PagerDuty's services is the fact that there are more demands on IT operations.

"Modern work is no longer ticket-based; it's driven by events and incidents," Tejada said. "PagerDuty is purpose-built to efficiently facilitate and automate the type of work that's essential to modern business success, who needs to perform it, and how it will be managed."

A key part of the automation, she explained, is the ability to integrate with different sources. Tejada said PagerDuty now has more than 650 integrations to help IT operations orchestrate and automate time-sensitive work. To build upon its offerings, PagerDuty shipped its event orchestration capabilities in the fourth quarter.

"Event orchestration intelligently suppresses noise, so teams can focus on the most critical signals and enables automated incident diagnoses in remediation," she said. "This lowers the cost of the response and the risk of the incident itself."

PagerDuty also launched a round-robin scheduling capability that allows centralized and decentralized teams to implement flexible, automated on-call responsibilities for IT operations, Tejada said.

AIOps and Digital Transformation Are Driving Growth for PagerDuty

The PagerDuty platform makes use of machine learning across more than a decade of operational IT data, according to Tejada. That data not only predicts the IT issues that are going to occur, but can also recommend how to improve operations or prevent an incident from happening again.

"Digital acceleration is not going away, cloud adoption is continuing and, with DevOps transformation, most of our customers are still early in that journey," she said. "Now we're seeing macro impacts like inflation, where people are trying to figure out how they are going to get more out of their current operating expenses, and that creates  a broader appetite for automation."

Looking forward, Tejada said her company is investing in more flexible workflow automation that serves new use cases and augments its current offerings for DevOps and IT teams. One such investment was announced on March 2, with the acquisition of privately held no-code workflow vendor Catalytic.

"Catalytic accelerates some of the work that we were already doing to improve the flexibility in our workflows," she said. "It  just makes it easier for customers to connect to everything and get work done faster in a more traditional incident response or DevOps perspective and increasingly in an IT operations perspective."

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