Welcome, everybody. And as our participants are joining in here, just a little bit of housekeeping so everybody knows how today's session will work. We welcome our participants to observe today's session. Questions and comments will be provided by analysts who are joined today's webinar in the panelist role. They will raise their hand to queue their questions. There will be multiple stops for Q&A in the agenda today, and we look forward to getting started here. I'm going to turn over to Christine Cloonan for Safe Harbor.
Thank you. Good morning, and thank you for joining us for PagerDuty's Investor Day 2021. With me for today's event are Jennifer Tejada, PagerDuty's Chairperson and Chief Executive Officer, Howard Wilson, our Chief Financial Officer, Sean Scott, our Chief Product Officer, Dave Justice, our Chief Revenue Officer, Julie Herendeen, our Chief Marketing Officer, Manjula Talreja, our Chief Customer Officer, and Phylicia Jones, Senior Director, Talent Development. Statements made on this call include forward-looking statements which involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. Forward-looking statements represent our management's belief and assumptions only as of the date such statements are made, and we undertake no obligation to update these.
During today's call, we will discuss non-GAAP financial measures, which are in addition to, and not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their closest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as a tool for comparison. A reconciliation between GAAP and non-GAAP financial measures is available. Further information on these and other factors that could affect the company's financial results are included in filings we make with the Securities and Exchange Commission. With that, I will turn the call over to Howard.
Thank you very much, Christine, and I'd like to extend a very warm welcome to all of you for joining us today. Thank you very much for your interest in PagerDuty. We really do thank you for the opportunity that we have to tell you a little bit more about the company for some of you who are new to PagerDuty, but also for those of you who've been here for some time or know PagerDuty over the past few years, to get an insight on how the engines of growth or growth that we laid out at IPO have, in fact, materialized and how we see them laying a very strong foundation as we move forward. I'm delighted to be joRined by a number of members of our management team, so this will be a good opportunity for you to get to know them as well.
Because this is a virtual event, we've decided to arrange it in a way that will hopefully make it interactive and interesting for you, so if you look at the agenda, myself and Jennifer will be spending a little bit of time to begin with in a fireside chat format chatting about PagerDuty, our vision, then Sean Scott, our Chief Product Officer, will take you through a view on what we've been doing with product and innovation, and then we'll have a Q&A session, so we'll, within the context of what you'd heard to that point, an opportunity for a discussion. We'll follow that up with the go-to-market and customer experience with Dave Justice, our Chief Revenue Officer, Julie Herendeen, our Chief Marketing Officer, and Manjula Talreja, our Chief Customer Officer, and we'll follow that section with a Q&A.
And then we'll have a brief Q&A. Following that, we'll have a Q&A, and following that, we'll have a brief break. And then to close out the final section, I will be giving the finance update, but also chatting about how we're thinking about the future and how we're thinking about the growth of this business over time. And Phylicia Jones will be joining us from our Talent Development team, and she'll be chatting a little bit about culture, ID&E, and ESG at PagerDuty, and then we've allowed some time at the end to round up for any final Q&A. So hopefully, the three hours that you spend with us today, you'll be able to engage with the leadership team, but also we've prepared some really good material to share with you.
Hopefully, for those of you who've been able to attend our Summit events or parts of our Summit event over the last few days, will be thrilled with the excitement that you're seeing both in our customer base and within our team. To start us off, we're going to move into a discussion with Jen. Welcome, Jen. Jen is our Chair and Chief Executive Officer, and delighted to be able to have a conversation with you on what has been a very exciting, busy week with Summit. Maybe to kick off, Jen, I'd love to hear just a few of your thoughts as you reflect on this week and reflect on Summit.
Thanks, Howard, and first of all, I just want to say thank you to everyone for being here. We know you're all busy and have lots to do, and we appreciate you taking time out of your day to learn more about PagerDuty, and likewise, to all of our investors and coverage analysts, we just really appreciate your partnership. We are in this for the long haul, and any opportunity for us to learn from you and for you to learn from us, we think, is a terrific use of time. Summit has been, is still, you see behind me, it's still a fantastic event. Frankly, I had such a great day kicking it off on Tuesday. We were able to be live in a studio for the first time in over a year with a number of speakers and then patching livestream guests in.
Was an interesting technical challenge, but also a lot of fun. Over the last two days, we've had more people engaging in content on our platform than we had in the entire week of last year's event, so registrations are still coming in, but we've already had over 7,200 individuals accessing content, so well ahead of that in terms of registrations, but just the people that are on the platform watching the livestream and the recorded content, up 23%, and it's just been a lot of fun to share the progress that we've made with our customers, and we tend to try and really do that through customer stories because I personally think me pontificating versus having a customer share how they've gotten value out of PagerDuty, how they discovered the products and services, is really helpful to our other customers.
Summit is as much about the industry collaborating on its own in terms of best practices as it is about us sharing what we're doing with our product roadmap or our vision. But the backdrop of Summit has really been about this transition from being remote to a hybrid face-to-face environment and the complexity that comes with that. And I will tell you that I saw many of my team members for the first time in 15 months. I saw many of my team members for the first time because we've hired a large number of employees and leaders over the last year. And that was a highlight of my Tuesday as well. During the keynote, we spent a lot of time talking about, over the last 15 months, we've all been operating without a precedent. And we use that word unprecedented a lot to describe the pandemic environment.
But for PagerDuty users and responders, people who are responsible for the front lines of digital operations, that really is their standard operating procedure, and I think what's special about PagerDuty is we are designed for that environment, but more to the point, we're designed to help distributed teams, teams that are distributed across functions and geographies, deal with the increasing complexity, the data overload, and the heightened security risk that they're facing as a result of how the way we work has changed and, frankly, as a result of the digital acceleration that we've seen. In the last year, critical events continued to grow, 21% year over year on average, with the cost of an incident around $150,000 per year to manage, even before you factor in the loss of revenue associated with that disruption.
And one of our enterprise customers said, "We monitor everything, but we see nothing." And that's kind of the equivalent of being lonely in a crowded room, right? So PagerDuty really does a great job, I think, of synthesizing, orchestrating, helping customers remediate, but most importantly, even preventing incidents from impacting the customer experience. And that customer experience has become so important because nowadays, the digital engagement with your brand, that digital customer experience is the primary experience. It's not a secondary experience. It's not in addition to a brick-and-mortar experience. And while we think some brick-and-mortar will come back and people certainly seem to be enjoying getting back out into the world, consumers are not going to give up the conveniences and all of the great new experiences they were able to enjoy in a digital fashion over the last year.
We've seen our largest customers growing at the fastest rate. We talked about this in the last earnings, but those who are spending over $1 million with PagerDuty are up 55% year over year, and I'm really proud of our teams and the transition that we've so successfully made into enterprise. When I joined the company five years ago, we were pretty much an SMB business, largely dependent on the tech and software industry, and now you'll see a hugely diverse customer base that you'll hear both Dave and Julie touch on later today. We know that the biggest impact to our customers' bottom line can be uptime, and we recently released a really exciting brand campaign that hopefully some of you have seen in your CNBC morning.
But we really do understand that uptime is money, that when your products and services are not available and reliable and as resilient as consumers expect them to be, it really does hurt that trust, that relationship that you've built. And over the last three days at Summit, we've had more than 75 speakers talking about what uptime means to them, how PagerDuty is empowering them to embrace these increasingly strong tailwinds that we've talked about in the past: digital acceleration, cloud adoption, and DevOps transformation. And one of my favorite moments was hosting Paul Cheesbrough, the CTO and President of Digital at Fox, along with one of his team members, Jeff Dow, who is an EVP there of Network Production. And they gave us a tour, a virtual tour of their operations center in Phoenix, which was quite incredible.
This is a center that I'll share a little bit more about this story in a minute, but this is a really great example of how PagerDuty has really become the backbone or the central nervous system for our customers. We also heard from Armon Dadgar, the Co-founder and CTO of HashiCorp, David Solomon, the CEO from Goldman Sachs, joined me for a fireside, and when I asked him about the future of work, he said, "Well, we all know I'm not an expert on the future of work," which I thought was quite funny. Clara Shih, the CEO from Service Cloud, was fantastic. She joined us from Salesforce, and then Hayden Brown, the CEO of Upwork, and Michelle Zatlyn, the COO of Cloudflare, so really incredibly diverse speakers, but all with a common thread.
These are all people who depend on digital for their businesses to operate, for their customers to gain the benefits and the values and services that they expect. So I'm really proud of everything that we've accomplished and happy to share more about it today. But I would encourage all of you to register and, at a minimum, try and watch the livestream, the keynote livestreams that were done on Tuesday, my talk and Sean Scott's talk.
And Jen, I think I was really blown away by listening to the experience from the folks at Fox, hearing Paul and Jeff chat about that. That, I think, to me, was one of the highlights because it really speaks to PagerDuty acting as a platform and acting across multiple use cases. Would you maybe like to elaborate a little bit about that for the benefit of the folks on our call today?
Sure. Well, one of the areas where we've been making significant investment over the last several years, starting with modern incident response and then increasingly with our event intelligence solution, is AIOps. And AIOps is so important because, as I mentioned earlier, our customers are experiencing data overload. And some of that's driven by the move to distributed architectures and serverless. Some of that is driven by our ability to instrument everything. And yet, there's a lot of organizations out there providing a lot of data, in some cases insight, but not connecting the action or automating the actions on the back of that insight. And so Paul and his team are a team we have worked with over the last four years.
Paul had a very bold vision for bringing together all of the operations of Fox's entire network environment, so their broadcast environment, their technology environment, and even their facilities to improve the resiliency of their entire operation and their business and improve the customer experience of the entire operation. Fox, as you know, is very important to a lot of people, particularly when it comes to Sunday night NFL or World Cup soccer. One of the things that they did was design, redesign, and take an entirely new think of what the modern infrastructure and application stack needed to look like for a company in the future. They have purpose-built their entire technology ecosystem based on where they think the world is going as opposed to Fox's heritage.
And part of that was to design a state-of-the-art, entirely IP operations center in Tempe, Arizona, which I had the opportunity to visit myself a few weeks ago when I was out seeing my mother for the first time. And what's incredible about it is the amount of resilience that is designed in to support Fox's global broadcast environment includes multiple redundancies for power, for water, a state-of-the-art data center, and an incredible operating environment, which, like I said, you should just watch the keynote because they took us through kind of a virtual tour so you can see what that looks like. And Jeff, while I was there, shared an incredible story about how they were finishing up the construction in the building.
And one of their contractors, while doing some final work, was drilling into a wall and accidentally punctured a PVC pipe in a room filled with very expensive and important equipment and hardware. And if that leak had gone on for more than a few moments, Fox was not only looking at a massive disruption of its operations, but potentially the destruction of the entire operations center. Because that facility is state-of-the-art, they had wired, they had essentially connected all of their fire and water automation systems, their SCADA systems, directly back into PagerDuty. And as Jeff shared the story, the team knew within 30 seconds of that water leak exactly what was happening, where it was. The right people were organized to go open up that wall, stop that leak. The entire incident was over in a minute and a half.
There was no damage to the hardware that would have cost $several tens of millions of dollars to replace, not to mention the $hundreds of millions of dollars that would have been lost after untold hours of potential downtime. And in that one incident, Jeff said, it paid for PagerDuty multiple times over. What I loved about that is their entire building management system, their entire broadcast operations environment, their entire IP network, and their entire application and infrastructure are all tied into PagerDuty. And when we first started discussing this program, Paul sort of drafted a picture of PagerDuty as the spine of the entire operations organization. And that really has come to fruition. And it wouldn't have been possible without event intelligence and without AIOps because that's a really important process of differentiating the signal from the noise, but connecting that, orchestrating that intelligently to the right teams. And then every time an incident runs on the platform, obviously, the platform learns. So just a really great example of how that all comes to life.
Yeah. I was really impressed by that because it did just show that orchestrating work and orchestrating the right people to get onto the right problem at the right time is what we do so well, and that's sort of a non-traditional use case. Yesterday, when Olivia Khalidi was doing her presentation at Summit around some of the work that we've done with not-for-profits, there was the experience from Trek Medics. Maybe you'd like to share a few thoughts on that.
Yeah, so many of you know that we launched PagerDuty.org several years ago as a result of the 1% pledge we took before we went public, and that's enabled us to drive millions of dollars as well as our product, our expertise, and our employees' volunteer time into a number of not-for-profit organizations to help them accelerate their missions, and one of our areas of focus is time-critical global healthcare, which was something we decided on well before the pandemic, but turned out to be a really good set of priorities for us, so Trek Medics is a nonprofit, an NGO that improves access to emergency care for at-risk and vulnerable populations, and we support their lifesaving emergency care by offering our platform for free to reduce disruptions and help them meet the growing demand of their Beacon platform.
Beacon. Think of Beacon as a text message-based emergency dispatch that alerts, tracks, and coordinates the emergency team members and networks to any mobile phone, regardless of whether or not there is internet access. And that, as you can imagine, is not an easy thing to do. So Jason, who came from Trek Medics, was speaking to Olivia and really shared that everybody through their platform has a way that they can send alerts and call for help, even if they don't have Wi-Fi access, even if they are homeless for that matter. And it works very much like a number of the response agencies that we serve. PagerDuty helps them keep an eye on all their services to maintain that 24x7 availability that's so important in helping, in fact, save people's lives.
And they've been able to use PagerDuty to get all of those signals coming into a single stream. So no matter where or when something happens, they can prioritize. They know immediately where they need to focus their team and their efforts. And it really has been important in helping them improve both the quality of care and their time to get to people and providing healthcare. And this is just something we think is one of many very important journeys that we are thrilled to be a part of.
Yeah. And I just love that story and the many other customer stories that we had over the last couple of days. So let's shift gears from Summit and talk a little bit about the past. So it's two years, just more than two years since the IPO. It feels like a lifetime to me, at least. And it seems like when I think back to that time of sort of flying through snowstorms in Toronto and up and down the East Coast, it seems like a distant memory. But it's just over two years. So I'd love to get your reflections on what's changed for PagerDuty and what have you learned over the past couple of years?
It's been an incredible two years, to be honest, since I think that was the polar vortex, Howard, that you were referring to.
That's right.
Since the IPO, our revenue has grown by 71%, which we're really proud of. We've expanded our enterprise and mid-market customer base by over 40%, and our customers who invest more than $100,000 with us are up over 90%. Our average revenue per customer is up 43%, so you just see, I think, really great expansion in all of the parts of the business where we've signaled they were priorities and they were focused. Like I said, this transition to enterprise is not a simple thing, and I'm really proud that we've not only come through it successfully with still significant addressable market in front of us because we don't have a single enterprise customer that is sold out. We've also done it in a way where we've moved from some dependence on a single vertical in software and technology to a very diverse customer base.
And I think that's just a real validation of how every single company in the market, every vertical, every type of business is making their way through a digital transformation journey that is only going to accelerate. But cloud is early and a significant tailwind for us. And that DevOps transformation, something that we were an early adopter of, that we've designed into our platform, is also still quite a nascent category. And then what we didn't expect in the last 15 months was that hybrid work would turn up as sort of another accelerant for the business. It's also been really exciting to see us expand.
And I think there were some doubters out there from being a single product company, which we were very well known for and very well thought of for, and really is the sort of beginning of our developer connection, but to a multi-product platform. And I say platform now because it's a word everybody likes to hear, but because PagerDuty has demonstrated it can be leveraged across many, many use cases across an organization, across different parts of the organization, across different user groups within an organization, from the developer to team leads to heads of infrastructure and IT to business operations. You've seen growth in security ops and more recently customer service ops.
So we really are demonstrating not only our intent to become the Operations Cloud for modern enterprise, but our ability to create, pioneer, and design a category that is digital operations management around the real-time operations needs of our customers that, frankly, have been emerging over the last several years and are only accelerating. And so while I love our developers and they will always be our starting point, and they're always the sort of loudest voice in my ear because they usually see trends around the corner and they are very demanding in terms of the usability of the platform and what they need, we now serve a number of communities across the business. And I think that is the definition of a platform. The other thing that I'm really proud of is how we've doubled our integration ecosystem, which now totals over 560 partners.
And I feel comfortable in saying that is the largest connected digital ecosystem in the market, particularly for what we do. And we don't just move data around. In many cases, we've leveraged that ecosystem to identify new workflows, to trigger dynamic workflow, to enable teams to have the benefit of PagerDuty's rich incident response capability no matter what platform they're in, whether they're customer service agents and they're in Zendesk or Salesforce, or they're working in a security environment, or they're working in a ticketing system. And so that's really helped us to, I think, expand our remit across the company in an area where we will continue to invest heavily. And I've always said for us, we see integration as product. And.
One thing.
Oh, go ahead. Sorry, Howard.
Sorry. Yeah. That made me think about you sometimes made the comment, Jen, about us seeing the value of being domain agnostic, like being a real-time platform within that rich ecosystem of over 560 integration partners or workflows, really. How do you think the competitive positioning of the company has changed, and how should investors think about our place in the market?
Well, I will tell you, and Gartner released a study on this recently around the AIOps marketplace. And their view is that this emergence of domain-agnostic AIOps platform is the perfect response to the needs of customers who are never going to rely on a single or even a handful of different monitoring environments. And so you require domain-agnostic, independent, objective, neutral ecosystems that can help you really understand and help your teams really understand, and more to the point, automate not just detection with clarity of what the real issues are, but the orchestration and increasingly the automation of the resolution as well. And I think that has put us in a strong leadership position because most of the other observability APM players out there, they're domain-specific. They have a sort of singular view or a more narrow view of the ecosystem their customers operate in.
And we're pulling that all together. And our remit on that front is growing each day. I'd also say that PagerDuty is really the only company that brings together all of that monitoring and observability, turns it into insight, intelligently orchestrates and engages teams, and then automatically actions the work in a way where the system learns with every incident, every issue, every opportunity that runs on the platform. And that means our machine learning and our AI models get smarter with every incident. So the next time an incident occurs, we're automating more and more of that. And so much of that was made possible through our acquisition of Rundeck. And we made some really, I think, cool product announcements this week with Runbook Actions, for instance.
But I couldn't be prouder of the Rundeck team and just how they've come into our organization, how they've been additive to our culture, and really helped us bring automation in service of the people. And that means we can automate responses with a human in the loop. We can also automate a response so that the human can go on and do something more interesting or more focused on innovation.
If we think about this and in terms of innovating ahead of the competition, what do you see as the vision for PagerDuty around our technology and product?
We talk about four things. One, delivering flexibility, so as you see these new use cases across our platform, we're building more and more flexibility into our integrations, into our workflows, and even into our automation features so that customers in different parts of the organization, like customer service, for instance, can leverage PagerDuty for all of their real-time work. The second is, we believe in the future, and we're starting to see the early impacts of this now, that you're going to need to be able to connect to everyone in your organization to orchestrate really important efforts across the business over time, and real-time work is not going away. In fact, it's shifting and becoming a bigger part of the mix of everyday work for employees, and that also means you need to be able to connect to everything.
We're talking about a really interconnected, organic, dynamic environment of services, people, information, workflows, etc., and a lot of organizations do just a part of that, whereas we bring all of that together, and when you're able to do that through integrations, through an API-based ecosystem, through the interoperability we've built, through 12 years of proprietary data around people, workflows, events, etc., then that puts you in a position to automate as much as you possibly can, but automate that in a smart, safe, and resilient way in service of the people who are operating these increasingly complex organizations, so more flexibility, connecting to everyone, connecting to everything, automating as much as you possibly can.
So we're seeing this transition from purely reactive incident response to proactive prevention and, frankly, proactive management of real-time work in service of these customer experiences where one out of four customers will leave a brand they love in seconds if it's not working for them. And I think that positions us very well to become the Operations Cloud for the modern enterprise. And we're already seeing that as our customers increasingly adopt more products. I mean, Howard and the team will talk about this later, but the leverage of the digital operations platform, the growth and attach rate of event intelligence and some of our other newer products is very encouraging. And I'm just really proud of the team because none of this is easy.
Yeah, well, thanks for that, Jen, and I guess one final quick question: if we just think about, obviously, in the sessions today, we're going to talk a little bit about how we're laying the foundations to grow to be a billion-dollar company, what are your thoughts on the key building blocks for getting us there?
Well, I think one, we need to continue to win in enterprise. And that's super important to our business. I think the ecosystem that we work in is going to continue to get more complicated, and that's important to us. But the TAM is very large. International is a huge opportunity. So we've seen real strength, particularly in EMEA. And we're excited about the ability to expand into other regions and see a lot of new addressable market there. With our EU data residency now, that's already opening up more opportunity for us. New segments like federal, as we work on FedRAMP, I think become increasingly important. And as I mentioned, new products, particularly AIOps, automation that open up new use cases for the company are important.
So I've always said that this is one of the things I liked about the business when I evaluated it back, it seems like 100 years ago, was that it was a business that had multiple engines for growth, but also a product that users love. And I've been in enterprise software for a long time. And you don't run into a lot of customers who say, "God, we love your product. We'd love to use it." And given that we're often a product that they're leveraging when things are not going well for them, that really says a lot. And so our focus on usability, on making sure that we can continue to deliver very fast time to value, minutes to market, I think, market-best ROI in a very short payback period, all those things continue to be important for us as we become the Operations Cloud for the modern enterprise.
Well, thanks, Jen. That's great. I think that really sets things up well for the discussions that are going to follow today. And I think you've laid out very clearly our vision to be that Operations Cloud. We created a category, digital operations management. We have a platform that's a real-time platform for getting work done. And we certainly are well positioned for the future. So thank you very much for that, Jen. And we'll get back to you in the Q&A as we go through the day.
Sounds good. Thanks again, everybody, for being here.
Thanks, Jen. So with that, folks, I'd like to introduce you to Sean Scott, who is our Chief Product Officer. Sean joined us earlier this year. It probably feels like a lifetime for him too, but it's probably only six or seven months. So I'll let Sean do a little bit of an intro, but he's going to talk to you about how we're thinking about product and innovation and also give you a little bit of a peek into how customers benefit from PagerDuty.
For sure. Thanks, Howard. I'm Sean Scott, the Chief Product Officer here at PagerDuty, so as Howard said, I've been here about six months now, so I came from Amazon, where I was responsible for a lot of the shopping experience, so both the actual what you see, what you shop, so homepage, product page, checkout, as well as a lot of the underlying platforms that support the internal development community, so tens of thousands of developers using the platforms that I was building, and then my last role there was building and launching the autonomous delivery robot, Scout.
And so people ask me, it's like, "Wow, those are amazing jobs." And it's like, "Yeah, but I think I found an even better one here at PagerDuty." So if I look at one of the reasons why I came, I saw that, as Jen mentioned, that digital transformation that was happening across lots of industries. In PagerDuty, I talked to a lot of my former colleagues and coworkers, and they were all in PagerDuty. And they said, "Yeah, everybody uses PagerDuty." And so the more I dug in to understand what that looked like, the more kind of opportunity I saw and the much broader role I think our platform will play going forward in this market. And I think we're just getting started. So I run product marketing and our UX design and usability for PagerDuty.
And super excited to talk to you all today and tell you about all the good stuff that we're working on. So next slide. So if you think about the customer experience and your expectations even as a customer, they're just getting higher and higher. And customers are becoming less patient with slowness or even outages. And as this slide shows, there's an industry standard called abandonment rate that people track and companies like Amazon and many others. But within six seconds, 50% of customers are less likely to make a purchase. And a third of them are more likely to actually leave and go to a competitor. So this world of seconds and minutes is what we're talking about. So it's not about hours or days, which is some of the legacy model that we'll dive into, but it's really about seconds.
This goes beyond just thinking about the customer experience, but also even your internal operations. So I thought the example Jen gave on talking about Fox Studios is super important. And we see that across a lot of our customers. Once they figure out, "Okay, we can actually apply this internally as well to our internal customers, our employees, and put it to these systems," the impact just gets bigger and bigger that we can have on the organization. So next slide. So if you look at kind of the legacy way, the centralized, very manual incident response pre-PagerDuty, so you have lots of data coming in to a central control center, often like a NOC, for example. And so all this data, these are log files, these are texts, these are emails.
And if something goes down or maybe a system starts to slow down, the NOC or that kind of centralized control team starts to engage. And what happens next is text messages, phone calls, trying to track down experts. Just, it's a bit of chaos, as you can imagine. And these often end up with tens or hundreds of people on a bridge to try to figure out what's actually going on, what's the root cause. And as you see at the bottom there, all this is happening while the clock is ticking. And so we're talking about minutes to hours to even days to get the full resolution with this model. And it's because these centralized teams don't have that rich expertise. They need to go find the experts. And so all those steps of, "Okay, what's actually happening? I need to go look at these logs.
Okay, it looks like this system may be impacted. No, but it's actually another platform that's impacted. It looks like it may be the root cause. So who's the expert of that system? And the clock is ticking. And so it's just a very hard, very manual process. And so we jump to the next slide. There is a better way, luckily. And that approach is measured in seconds and minutes and hours. And that approach is with PagerDuty. So now we have all the data still coming in, all that signal is coming in. But we use tools like event intelligence and AIOps to really filter that noise. And instead of going to a centralized team, we're now going to the actual service owners. So we're talking about full service ownership.
So this is where the developer, the builder, or the tech team actually owns their code and their services in production and connects it to the business outcomes. So now when they see something is happening with their service, they're the ones engaged, not the central control team that doesn't have that expertise, but the actual owner who wrote the code. And so now you see the timeline at the bottom. We're now talking about seconds and minutes. I think the case Jen gave, back to the Fox example again, of the right people were contacted, not the central control point. It's then got to go figure out, "Okay, who runs the building management?" But the actual person who has the ability to shut off the water in that case. And so all this is happening in real time, as you can imagine.
And then on the right side, we also connect the business leaders, the stakeholders, and keep them informed and have the tools to work where the employees are already working in tools like Slack and MS Teams. So if you get notified into an incident and you're looking at your phone, you're at home in bed, and you can actually just pull up Slack and actually start doing work right there. But all this orchestration, you can think of the spine of that central nervous system is what we're talking about and what we do. So let's go to the next slide. So we'll show a quick demo now to kind of just put it all in context and give you a better feel of how all this works in concert.
In an always-on world, you need your digital systems to just work. But sometimes things break. You need to be prepared for anything and everything. Because when it comes to your customers, teams, and business, every second matters. That's why companies around the world rely on PagerDuty to manage their real-time operations. Our digital operations management platform is the best way to stay on top of urgent, mission-critical work and keep digital services always on. Only PagerDuty combines the power of machine automation and human action. We'll handle the repetitive tasks and direct the more urgent, important work to the right people in real time so you can focus more time on what matters most and stay ready for what's next. PagerDuty, ready for anything in a world of digital everything.
That was actually our commercial and not the demo. I was. Even before Hoffman's big annual sale, early bird shoppers are already queued up on the streets or at home eagerly hitting refresh on their browsers. They're excited about advertised specials helping to swiftly snap up the limited quantities of the most popular children's toys, trending video game consoles, and designer apparel. Fluid fleet logistics and location dispatch are vital to the success of retail business on such a paramount day. Working all day and night, delivery drivers are transporting stock from our warehouses to retail outlets. Inventory teams are managing stock. Customer service teams are fully engaged to ensure customers will experience nothing less than excellence. Systems engineers are on standby, ready to respond and resolve any unanticipated infrastructure issues due to the seasonal spike in traffic. Platform engineers are monitoring all aspects of their e-commerce platforms and their buyer's end-to-end journey.
Our CIO is proactively checking all digital channels to ensure a successful day. Now the evening unfolds. The delivery driver is on his way to the retail outlet when suddenly Noah, the inventory operations engineer, notices the truck has come to a standstill.
Uh-oh. Looks like there's an issue with one of our deliveries. This truck hasn't moved for five minutes already. I'll handle this. Good thing I designed a response play for circumstances like this. After five minutes, this type of issue is escalated to higher urgency. Through PagerDuty's event-triggered webhooks, we automatically dispatch roadside assistance to that stalled truck. We also proactively sent the next scheduled delivery early to ensure that stock is delivered on time to the store.
With just one click, Noah runs a response play to automatically engage additional teams, initiate a conference bridge just in case it's needed, and inform stakeholders of current status.
Priority one response play executed. There is no time to waste.
Well-informed by additional grouped incidents about increasing engine temperature, the repairman will proceed to fix the problem as soon as the engine cools down.
Oh, good. Turns out the mechanic got our stalled truck running again really quickly. Now we can slot its load back into today's delivery schedule. Time to close this incident out. Good thing our next delivery was ready to go and we could send it out early to the store. Having no stock available for customers to buy would have meant lost revenue on our biggest day of the year.
Always on and always prepared in the moment of hypercare via round-robin scheduling, several teams of systems engineers will have all five floors of the flagship store covered in the event of any surprises that occur during opening hours. Still, hours before the store opens, Miyoko, a systems engineer, is covering the night shift when suddenly she receives a P1 notification from PagerDuty on her mobile phone.
Oh, no. New York payment terminals are unable to process orders. Good thing we're catching this early and off hours. Let's get this fixed fast before our customers are impacted in the morning. I'll quickly run this P1 response play to let the stakeholders, executives, and especially customer service operations team know that orders can't be processed and there's potential risk to customers. Yikes. This can't calculate sales tax. P1 seems related. Glad I engaged the platform engineering team from the play. They can further investigate and fix this quickly.
Ronaldo, the platform engineer who is on call and is already working on the issue with the sales tax API, views the PagerDuty service graph. It helps him visualize the business and technical service dependencies across the entire digital ecosystem and assess the impact radius of the incident.
Wow. That sales tax service is impacting the in-store RFID and payment devices just at the New York store. But luckily, not our web or mobile channels. Unfortunately, this has been happening frequently. This change seems like an accident. No web or mobile change events. Also, PagerDuty's machine learning is suggesting that this problem has actually occurred before, so this update shouldn't have happened.
Over the next five minutes, thanks to PagerDuty Runbook Automation that helps automate manual tasks, what could have taken over 30 minutes to execute, Ronaldo accomplishes in little time. He views the automation options and decides to run a few Runbook actions. First, he quickly confirms the root cause with some diagnostics.
Almost done. I'll execute this Runbook action to roll back to the last successful update instead. Great. The rollback was successful.
Meanwhile, our customer service operations representative who is on call also joins in.
I'll subscribe to this incident and stand by. It's better for me to be proactive and ready to send out an apology to customers along with a discount coupon just in case checkout isn't restored in time for the store opening. We need to keep Hoffman's a place for happy customers.
Ronaldo heads to the kitchen for a cup of coffee and hops onto Slack on his mobile phone to send a response note.
The rollback to 2.0 was successful.
Miyoko and Ronaldo resolve their incidents.
RFID checkout is restored with no impact to customers.
Now back to business as usual. I'll get started on that postmortem soon. I'll make sure to include some timeline activity from Slack, Ronaldo's remediation activity, especially those Runbook actions, and other important details useful to the management and our new hires like Olivia.
Our CIO, Ava, has recently been promoted given her recent success with the retailer's digital transformation. This is her first time as CIO on such a big annual sale day, a critical defining moment. With ongoing conference calls throughout the day, she's kept up to date on all critical business services through PagerDuty's status dashboard and stakeholder updates. Not flawless, but not completely unexpected on such a busy day. I'll take no impact to customers as well as minimal response costs associated with the P1 over no inventory or unhappy customers. As the day ends, Ava puts her feet up to rest, assesses the operational risk for the day, and rejoices over this year's increased revenue and lower responder costs. PagerDuty was our retailer's lifeline for managing mission-critical real-time work.
Today would have been an absolute disaster without PagerDuty to manage our entire operations at scale on the most crucial day of the year.
So you can see there's lots of complexity there across this entire ecosystem that we're operating in, and that orchestration is critical, so again, if we think back to the customer experience, little things matter, and so having the machine learning, the automation, working across all these different services like Slack and Webex and MS Teams or just even our digital app is critical, so when we put it all together, we look at this operational maturity model for our customers and for different industries, and what we see is within a given organization, they may be at different levels of this maturity model just amongst their own teams, not to mention the company. As I was talking to a financial services company, and they were saying, "Well, who does this well?", so they're in the very early stages moving from manual to reactive.
So I think this slide actually gets me pretty excited because it just shows how much opportunity there is for PagerDuty and for the marketplace and just how much evolution is still going to happen for where we're at. It's very early days, which means nothing but upside for us. So if we look at the model, so we're really talking about that very first slide I showed you about what does the manual process look like and moving upstream, getting a little bit better, a little bit faster. Again, every step kind of gets to faster response time. But I've bolded a few of the key elements of each one of these steps. So manual, I think that's pretty self-evident, just lots of heavy lifting, lots of hard work, lots of chaos. We moved to reactive, which is getting a little bit better.
So you're starting to get the alerts and understand what's going on, but still not a lot of defined processes for managing the issues. Responsive is now we're actually starting to get to the distributed teams taking ownership, so that full-service ownership model I talked to, and then getting into the proactive, the best incidents are the ones that don't occur, so now you're actually starting to do things like getting the right people involved and looking at kind of best practices, and that kind of takes you that last step around preventative, so you're constantly learning, constantly improving your systems, and so some of the launches I'll talk about in just a minute are actually setting up for that more preventative, so how do you make your system super stable? You're super focused on operational excellence across the board and always trying to keep that system up and going.
Having those signals that can really help you do that is critical. Next slide. When we look at all the product offerings that we have, we have this two-dimensional graph here. On the left side, we see observability moving to insights and actions. Observability is just having the log data. Our ability is actually to be able to take that data, investigate it, enrich it, and take action. The action could be human action or automated action, but we orchestrate that. On the bottom, going from not built for real-time, like your ticketing systems or kind of legacy ITSM, up to that real-time with, again, more automation.
So there's a lot happening kind of in this space, but I think where we're at is we're well-positioned to really do great things as we go forward, given the pieces that we have that I'll talk to in just a minute, and so if we look at all the steps of a given incident, and again, this doesn't necessarily have to be an outage. It could just be a degradation of performance. There could be a slowness. There could be lots of different things that can actually trigger this incident response workflow.
But you can, again, see there's a lot of steps here from deploying the actual code or whatever it is you're deploying in the beginning to detecting something's wrong to figuring out who to assign it to, that first assignment, to then really doing the analysis to understand what's actually happening and the investigations to, "Okay, now how do we actually solve it? Do we need to push another code update to the resolution?" and so this is kind of the legacy approach again. and so if we move to the modern, to the CloudOps, the full-service ownership model, you see you're using tools like CI/CD, continuous integration, continuous deployment, APM monitoring, observability tools, all the way up to full-service ownership. and then you're starting to get into triage intelligence.
So the tools that we have with AIOps to really help you reduce a lot of that noise and to better highlight the signal is part of that investigation as well. And then getting into the remediation is back to that automation. So helping the responders with tools to help them know what's actually going on. So for example, we could do a deep health check on a service before anyone's even brought into the call. And so that automation is actually happening. So it's not just trying to resolve the incident with automation. It can actually just help make you more efficient as a responder to, again, reduce that timeline. And then the resolution is the entire process of incident management.
So this is a pretty, I think this is a really important slide. There's a lot going on, and you see that you have the time graph in the middle and how we go from seconds to hours to days with the legacy and, again, back to just that real-time critical work. So time-critical and business-critical work is what we're all about. And so next slide. So Jim kind of, she started talking about the vision, and I'll dig in a little bit more about what that means. So we look at these four pillars for our broader vision. It starts with the flexible workflows. So we see beyond just DevOps, we see our product being used for IoT device management, security event orchestration, to even organ transplant delivery. So it's being used in just so many different use cases.
And I think that's really exciting because that just, again, paints more opportunity for us to really go target and to better understand the use cases. But it starts with the flexibility of our system to be able to handle all of this diversity. Connect to everyone. So go back, please. So it's more than just engaging a tech team. It's empowering the entire organization to work in concert to deliver that perfect customer experience. That means bringing in stakeholders and business leaders to make sure they're aware, engaging customer service so that the customer service team knows what's actually happening, and they can even hear from the customers to give another conduit or voice back to the tech team. And that's a big area for us. Customer service operations is an area that we've seen a lot of growth.
And with that growth, we're continuing to expand our investment in that area because we think that is a very powerful signal for organizations to really help them deliver that perfect customer experience. The developer ecosystem and connect everything. We have one of the largest developer ecosystems, as Jim noted. So with over 560 integrations, we can quickly connect to the most complex homegrown environments without an army of consultants. And that's pretty unique for the enterprise industry to not have to have an army of consultants to do something. So that's a very powerful advantage for us. And we work where our customers work. And you saw in the video with tools like MS Teams and Slack and our mobile app. So you don't have to be kind of sitting in front of your computer to actually get work done.
It's like we're working wherever you're at on whatever you're working on. The last bit is automate everything, so with the Runbook technology fully embedded into PagerDuty and into that incident response workflow, we can now get rid of a lot of the waste and that wasted time, and this really just helps keep your cost down. You think about the surface area that companies are now having to manage. Even just take something like security. The security threat analysis, the vulnerability analysis is just growing exponentially, and so how do you manage that without having to break the bank in terms of all those support costs? It's through automation to help make your employees much more efficient in their response.
And when we tie this all together, everything and everyone connected straight to the customer, you create more ownership of the customer experience, which provides employees a tangible connection to business outcomes, which ultimately keeps your customers and internal customers working and happy. Next slide. So PagerDuty is the de facto standard digital operations platform that powers many of the world's largest companies. And this slide's really showing all the different signals that come in from change data to your monitoring data, insights from customer service activity. So we take all those feeds through those 560 integrations, do machine learning analysis of it, and then orchestrate the work. And that could be engaging humans. It could be engaging automation. But that's the brains of the operations that's actually doing all this heavy lifting and making sense of all this data from across the organization.
And again, when you have to do something like this, this is not an easy task because we're talking about lots of signals, lots of diversity, and just not many people out there doing this to this level that we're doing and the work we're orchestrating. And so by having that broader vision of those four connected pillars, it just gives us so much more powerful, so much more power in the market to tackle more work going forward. So Jim also mentioned the multi-product use case. So we started in the left side that's on-call management and incident response. And with the acquisition of Runbook, we've now expanded into automation. We have intelligent event management as well. That's our event intelligence. And the customer service ops, again, is another SKU that we recently launched that we're expanding in. And so it all starts with our platform.
So we have extensible APIs, the integrations. We integrate with also with we haven't talked much about, which is systems like Okta and Microsoft Active Directory to get that user base, but that also enables us to connect to more parts of the organization and even do more powerful automation as well, but this is critical for us because now we're taking our kind of core components, platformizing them. We already have customers that are just using our APIs, for example, to customers that use APIs and all of our user interfaces, customers that just use our user interfaces, so this flexibility of a platform is critical because with the right foundational components and the right primitives, platforms flourish, right, and so we have those platform pieces already. Customers are already using them.
And so now we're actually starting to launch the new products, which will just continue to grow PagerDuty across enterprises. Next slide. so at Summit this year, we launched a handful of new features that are all really powerful in their own right. and we'll dive into each one of these over the next few minutes. Next slide. so the first thing we did is connected Runbook technology directly to PagerDuty. so this is our first new launch. This is a big deal for us that combines those two technologies, PagerDuty and Runbook. and what it does is it equips responders with automation they can use directly inside of the PagerDuty interface.
So again, I mentioned that as an example. I come to PagerDuty, and I could kick off a script to say, "Okay, go run a deep health check on this service." So the old way is I'd have to literally log into a remote service somewhere, run a bunch of systems commands, copy all that output, paste it back into PagerDuty to say, "Okay, here's what I saw." Now that can all happen directly in the interface. And that's what we're showing here on the right. And all of that just means less interruptions for developers because now anybody can run these automations as well. This is a pretty big deal because now you can also tie it directly to the event data. So before anyone's even engaged, the automation is running.
So we can run things like systems commands, Runbook jobs, or safely delegated scripts directly inside the PagerDuty interface. So we're very excited about this. And our customers, even since Summit, the early feedback is people are really excited to start using it. And we showed the use case of Trimble and their usage of it. And they're already off to the races with it. And we think it's going to be really powerful in just helping reduce costs of making your responders much more efficient. Next slide. So the service graph is another big one. So this is back to when I was talking about full-service ownership. So this is the build-to-own-it model for developers owning their code in production and connecting it to business outcomes. And that, in turn, gives them better code, faster incident response, and a competitive advantage through faster innovation.
But the first step in really having full-service ownership is knowing what you own in production and what your dependencies are, not just your immediate dependencies, but your second and third-order dependencies as well, which is often pretty difficult. And so what you're seeing here is the service graph. And so if you're a service owner, you saw some of this in the video, it actually gives you a quick glance to assess what's actually going on or what is the health of your services. And dependency management is probably one of the hardest things for a responder to really understand and know what those dependencies are because they're constantly changing. And as you get further away, kind of the seven degrees to your dependency, it just becomes much harder to manage.
And so without something like this, your company goes up every hop, every step to try to, "Is this what's out?" Nope, it's not this one. It's their dependencies. And so having this view, again, really empowers responders to shorten that time to remediation. Next slide. So this is another one. Using our machine learning, we have change categorization and incident outliers as well. So change events is probably one of the most common causes of outages that we see across industries. And I think it's 80%-90% of outages are usually due to some change, either a code change or a network change or a hardware change. But this is another pretty big one. So our event intelligence team is entirely focused on reducing mean time to resolution for our customers.
So that means that after a recent PagerDuty update, our customers' mean time to resolution will go down based on changes like this. So that's a pretty powerful thing that they have to do nothing, and yet their site is getting better and their services are getting better just as a result of the PagerDuty updates. So this saves time during root cause analysis by surfacing the changes that most likely caused the issue based on time-related services and machine learning analysis of similar incidents. So this enables them to identify the root cause faster by eliminating the irrelevant changes that could be the contributing factor. And then incident outliers help you detect anomalies using historical data and label them ams rare, novel, or frequent. And so as a responder, I can now start to see if I have a frequent incident that's always happening.
It puts a nice label of frequent up there for me. And I can now start to get proactive by doing automated remediation with that or just digging into what the code is. Likewise, conversely, if I see one that's maybe rare or novel, that means that's something I might want to pay a little bit more attention to because it could be something really wrong, and it could be an early signal that something bad is about to happen. So this is another incident outliers is another very powerful feature that we think will really help our customers. So start moving up that operational maturity model and getting into the more proactive space. Next slide. We also launched Salesforce sorry, we also launched PagerDuty for Salesforce Service Cloud with our friends at Salesforce. So this one is also very powerful.
So we now have a console and a dashboard directly inside of Salesforce to help frontline customer service agents and key internal stakeholders understand customer impacting outages and immediately engage tier two and tier three experts as well as tech teams. So you're sitting there on the front line, customer calls and says, "I can't check out," or, "I can't make a reservation." So now directly inside of Salesforce Service Cloud, the agent can actually pull up the console, see what's going on, and actually provide context back to those experts about what they're seeing. So maybe they don't even know it yet. So in some cases, we see that maybe the dashboard's green and all the services look great.
The customer is now that canary in the coal mine to provide that early warning signal that something may be bad about to happen or the site's going down or something as an early warning indicator. This is another really powerful new application for PagerDuty. What it does is it starts to expand our footprint within the organization because now we're going beyond kind of those core developers and operations. Now we're starting to move into other areas and other use cases across the enterprise. This one is, I think, it's really exciting. We're also expanding the round-robin schedule. If you think about a call center where instead of engaging one person, you have an incident, and it's the next available person who needs to take that. We're expanding our customer service plans as well.
And that helps distinguish between things like response plays, the round-robin scheduling workflows, our help desk integrations, and monitoring integrations for support engineers. So this is a very new, powerful application that we're very excited about this one. I think this one's got a lot of legs for us. And then next slide. Then lastly, we announced the State of Digital Operations Report. So we're publishing platform-wide observations and trends quarterly for the world. And this will culminate in our annual State of Digital Operations Report. So we leveraged the data from our over 13,000 customers to find some key insights. And as Jen noted when she was talking, so we've seen critical incidents up 21% between 2019 and 2021. And each incident takes, on average, two hours to resolve and costs organizations $150,000 per year to manage.
And that's on top of the cost of the business being down, which can run well into the millions of dollars. But we also found, which I think is also pretty interesting, is that responders were working more irregularly last year and working extra two hours per day to deal with issues around the clock. And we know that when people are overworked, they're more likely to quit their jobs. So with our rich data set, we're able to provide these types of insights and observations not only across all of our data but also by industry and vertical. So now as a company, I can actually go baseline myself. So how am I looking against other travel competitors or other financial service competitors? So it becomes a very powerful tool to also just help manage your operations.
So I think this is another really interesting data set that we'll be publishing for the world. And it just shows you the power of our platform and the uniqueness of our offering. So PagerDuty is the critical infrastructure, the Operations Cloud for modern enterprise. We're the leader in real-time work, and we'll continue to lead innovation in this space going forward. So we've been doing this for over a decade, helping shepherd some of the world's largest companies. And we haven't just customized the ticketing workflow. We've invested in truly solving digital roadblocks for our customers. So we make our customers digital winners. And with our customers, we deliver that perfect customer experience. That's it for me. Thanks.
Thank you, Sean, and at this point, folks, we're going to go into a little bit of a Q&A, so maybe Sean and Jen, if you can join me. Sean, maybe you want to turn your camera on.
Sorry.
Seems to have gone off. Then we can take some questions. So Joshua, if you want to let us know or Christine, what questions are there for us?
Yes, thank you. I was hoping to go to Sanjit Singh with Morgan Stanley first. Sanjit, if you'd be happy to come on camera, we can start with you. Other panelists, if you'd like, you can raise your hand, and we'll cue you. And we'll add you to the spotlight so that you can come up with the group. Sanjit, you can go ahead and speak if you'd like to unmute. And if not, we'll go ahead and move on.
There you go. Hi.
There we are. Go ahead.
Thank you, sir. Thank you for the presentation. Sorry for the technical difficulties, so maybe a question for, I guess, Jen and Sean, talking about how the product is evolving and then your own go-to-market motion. You mentioned, Jen, that you've been on a multi-year journey to move up to the enterprise, and that seems to be going really well. At the same time, the product and the solution set is evolving, and what I want to sort of ask you about is the importance of the mid-market because it seems like those are the customers who are converging things like operations and security and maybe earlier to adopt, say, a customer service use case versus a large enterprise. Do I have that sort of trend line right? How important is it to kind of be the leader among those more digital native customers where I think unit economics for maybe the large enterprise may be more attractive over time, but to stay on top of the innovation front, how important is contributing to serve that mid-market customer?
It's super important. You're pointing out, I think, a really important strength in our business. So mid-market and upper mid-market are where some of our highest-growth customers exist. This is where the Twilios and the Slacks and the Okta's of the world were born and where developer influence tends to be the strongest. And so you'll often hear me when I'm talking about the diversity of our customer base, I'll talk about the most disruptive innovators all the way through to the largest category captains.
And I think that's one of the beautiful things about our business model is that we still attract and inspire and innovate on behalf of the most progressive developer and digital-centric companies in the market and, to your point, cloud-native, digital-native organizations, and at the same time have been able to drive this product into much larger organizations, but generally starting with the same land motion and the same virality, which starts with going to the most innovative part of the organization, the application developers that own and are responsible for the applications and services that engage their end customers, their consumers, as opposed to going in more of the traditional IT enterprise-facing side of the business.
And I don't think there's a single large customer that doesn't start with a champion in the developer side of the business, that doesn't start with a champion who owns those applications that drive that consumer revenue, drive that consumer brand experience. And I'd also say one of the strengths of our business, we've often talked about it as our hybrid land and expand motion, has been the velocity of our mid-market motion, the fact that the vast majority of those customers land through our self-service e-commerce environment and increasingly through our freemium product, which removes friction for customers to be able to try the product, and then they grow within that organization. And it's one of our highest-performing businesses. It's also one of those businesses where I think the flywheel effect is the most obvious because we start in those developer teams. It moves into management.
That leader tends to be a CTO. That CTO goes on to another startup or another mid-market business, and in some cases, we're seeing those digital-native CTOs now being named CIOs and CTOs at some of the largest companies in the world, so that ecosystem is self-referencing even between the mid-market business and the enterprise business, and our leader there does a really good job of actually driving new product discovery in that sales process as well, but that is probably our most efficient sales process, so you'll usually hear Howard and I refer to mid-market and enterprise always together in the same sentence because while the sales motion can be a little different when you get into a more highly regulated enterprise environment, that velocity sort of inside sales motion that drives a lot of expansion in the mid-market is still applicable in our enterprise customers too.
So we get the benefit. The last thing that I would say, and then Sean, you're welcome to add anything, is that our mid-market go-to-market team has kind of become the farm league for some of our best enterprise sales reps. So our reps come in. They start in an inside sales motion, maybe in a BDR role, and then they grow. They learn the product set. They grow through mid-market up until they're a mid-market majors rep, potentially, where that's really small enterprise. And then they may step into an enterprise role. So they already know that high-velocity selling motion. They tend to be very technical, able to have a conversation with a product-led conversation with technical buyers before they're moving into more of a sort of top-down SaaS enterprise motion where you've got to negotiate with procurement and drive more account strategy across a much larger organization.
Makes total sense. One quick follow-up, maybe for Sean on Rundeck. That seems to really drive that sort of real-time work and shorten the sort of mean time to resolution. As you think about that increased value delivering to customers from a monetization perspective, is that product, is that capability just being folded into the base subscriptions, or is that something you're going to monetize, that increased capability?
Yeah, no, it's a separate. Yeah, sorry. It's a separate monetization channel. And so we're looking at runbook actions that we showed as an add-on. And then we're also looking at other revenue streams for automation because we think it's a pillar unto itself, right? And what's nice about it too is it gives us another way to land. So if you're just kind of need the automation solution, maybe you're kind of interested in PagerDuty but not quite sure about the incident management, we're now landing with just automation. So it just gives us another pillar to actually start with an account, and then we can expand from there.
Perfect. Thank you so much.
Okay.
Sorry, Joshua, I was just going to say, do you want to get the next question for us?
Oh, yeah. Absolutely. Thank you. Now, folks, if you are dialing in over telephone, you may need to use the star nine command to raise your hand if you don't mind. Just making sure everybody can have a moment. I was asked to move next to Derek Wood, Cowen and Co . Derek, I'd like to have you unmute your line.
Yep. Can you hear me?
Go ahead, please. Thanks.
We can see you too. Hi, Derek.
Hi. Now, great. Hi, guys. I wanted to ask about, I mean, you're working with a lot of observability and monitoring companies, and clearly, there's been a lot of activity in that space, a lot of consolidation, a lot of change in approaches to APM. I would think in one sense, it would be a good thing for you guys because there's so much change. In another sense, you're seeing vendors trying to introduce new capabilities and probably noise around kind of what they can do and what you can do, so we'd love to hear, given all that activity, how has that impacted you guys? How has it benefited you guys? What are the challenges, etc.?
In some ways, it drives more demand because, to your point, there's more data coming in. There's more noise coming into our customers and not enough intelligent signal. None of those companies actually orchestrate intelligently those insights to the right team. It actually kind of creates a bigger problem for our customers in many cases. When you ask them like, "Hey, how's your observability and monitoring strategy going?" It's kind of the same response. It's like, "Oh my God, I'm trying to consolidate that. I want to have less, but I can't." Most of our customers, the vast majority of our customers have homegrown instrumentation. They have network instrumentation. They've got observability in the stack, etc.
And while all of those observability and APM players are trying to go after more and more of the IT environment, we're also looking at all the applications, all the other functional platforms that our customers are plugged into. So when you look at that picture of PagerDuty with the brain and the integrations, and we've used that kind of illustration for many years, it's not just about the observability signal coming in. It's also about how do you integrate to the ticketing platforms, how do you integrate to the security environments, the cloud services, etc. So that orchestration piece of it is really important, and that also lays the foundation for automation for us. So it's kind of apples to oranges, even though I think everybody and their mother is talking about having an incident management offering.
But in all of those companies, PagerDuty is the brain inside those incident management solutions because we're doing the orchestration from that signal to the teams and closing out the action. And in fact, now you can run that entire response on a mobile device. So whereas typical observability platforms, you're kind of connected to your desktop, they really aren't driven for, they're really not designed for mobility. So I think in many cases, it bodes well. I think the biggest challenge it creates for us is a marketing challenge because every day, someone's using a different way to define incident management, etc. But the vast majority of those companies talking about doing incident management are using PagerDuty, integrating into PagerDuty, reliant on the PagerDuty signal correlation, etc., to make all of that work.
So for us, that's what's driven part of this shift in messaging towards digital operations and the Operations Cloud because it is so much more than just the signal coming in. And by the way, in most cases, that's not a signal. It's a kind of single-dimensional alert that goes to many teams that needs to be correlated against tens or hundreds of other alerts to determine whether or not that is storming to become an incident or whether that's a standalone problem or whether that's just noise. And that's a lot of what our event intelligence solution does. The other thing I would say is this domain agnosticity is super important because it means that over time, our ability to capture events and really understand the signaling gets better and better. Our machine learning models get broader because we are independent.
Customers are not concerned about plugging different things into PagerDuty. And what that's driven over the last several years is our customers architecting PagerDuty in front of everything, right, and then driving the orchestration back as opposed to it sitting behind a ticketing solution or behind a single APM solution. I think the trends are moving in our favor, but you're going to continue to see us invest in marketing and messaging that really helps people understand the difference. The idea of being a central nervous system is not just ingesting and pushing events. It's actually, do you need to move this part of your organization? Is it in this part of your team? What needs to happen? And after you do that, what's the next step? And how do you automate that in a safe way? So think about it in terms of observability and signal, then engagement, then automation and resolution, all in a single platform, right?
Yeah. Really helpful. Thanks for that, Jennifer. And if I could squeeze one more in, the PagerDuty for Salesforce Service Cloud, is that GA? And is that going to be resold by Salesforce or any more color on that?
Sean, you want to take that?
Sure. Sure. So it's not GA yet. It'll be launching in just a few months. And we're working with Salesforce on kind of the partnership and what that looks like right now. But we.
Yeah. I will tell you, though, both Zendesk and our Salesforce applications, they started out as simple integrations, and we've seen enough demand for them that we're really building almost an application environment so that customer service agents in Salesforce or in Zendesk, for instance, can do anything they would do in PagerDuty within those platforms and both instigate an incident on the back of a customer signal. So a customer tweets, a customer calls or chats, they can actually initiate the incident response process now with the technology teams and get help much faster on a problem. And both those companies are also PagerDuty customers. So we've learned a lot working both with and before them, but it's just a great example of how every company is now a software company. Every company is now digital and has to manage that digital experience.
So that customer service team, that dev team, that IT team, the security team, they're all inextricably linked. But historically, they worked all on different platforms that didn't talk to each other and had to manually kind of swivel chair, email, engage to try and collaborate on a response. And when that has to happen in seconds now, it just doesn't work. So I expect to see those relationships continue to grow.
Very good. Thank you.
Thanks, Derek. So folks, I have the job to make sure we stay on time. So for those folks that still had questions, please keep those questions. There will be other Q&A spots later as we go through the morning. So what I'd like to do now is introduce Dave Justice, our Chief Revenue Officer, Judy Herrenbein, our Chief Marketing Officer, and Manjula Talwaya, our Chief Customer Officer. They're going to be taking you through the go-to-market and customer experience. So Dave is going to kick things off. So over to you, Dave.
Thank you, Howard, and good morning, good afternoon, everybody. Great to be here with you all today. Good to see some familiar faces out there. If we could just go to the next slide, let's kick things off, so before we get into our overall go-to-market motion, I wanted to just spend a couple of minutes talking about the value of our platform, so if you think about, and what we're hearing from customers about the value of our platform, and if you think about how everything started at the beginning for PagerDuty and how we really took off, it was really about personal value for engineers. It was about helping them to do their job more effectively. It was about helping them to distribute work, which helped the overall employee experience, and that enabled us to establish ourselves as that system of engagement for engineers.
Now, as we have gone down the path on this enterprise journey, the interesting thing that has continued to evolve is this business value story has emerged, and you've heard a little bit about this so far today, but actually, IDC conducted an interview of our enterprise customer base. It was a broad interview of our customer base in the enterprise space, and I think they do a great job of depicting what we've been hearing from our customers but actually quantifying it, so on average, these are average numbers, and this is a public report that you can read, but it's pretty compelling, and I've been in the enterprise software space for a long time, and to me, at the end of the day, it's about solving problems, and it's about adding value to your customers. This is a great story to take to business decision-makers.
There's a lot of good stuff we could talk about, but I'll bring your attention to two areas. One, the average ROI, this is average, not the best in class, average ROI for an enterprise customer on the PagerDuty platform is 795%. So there's not many companies out there that can speak to that type of value. But the other interesting component of this is the speed to payback. The average payback for customers on our platform is just over two months, 2.1 months. And we've got customers that are doing even way better than this, but great stuff. So why don't we go to the next slide? So how do we get this message out to the market? Well, today, we're going to talk to you about our go-to-market motion.
And I'm going to start by kicking things off, talking about market segmentation, verticalization, a bit on how we're structured. Then I'm going to hand it over to Julie Herendeen, who's our CMO. She's going to talk about how do we educate the market? How are we bringing this message to market? And how does that complement our land and our self-serve capability to land new customers? Then we're going to move to Manjula Talwaya, who is our Chief Customer Officer, to talk about our expand motion, but really dive into how we bring some of these customer journeys to life. Next slide, please. Okay. So the interesting thing about all these great logos and what it highlights to me when I look at something like this is every company, irrespective of the industry that you're in, has to participate in this digital economy.
And if you look at it, these are the industries that we play in, and we really have a horizontal platform. We're not overly reliant on one industry. And you can see, as Jen mentioned earlier, in each of these industries, we're working with the category leaders or the vertical leaders, but also the innovative disruptors. Why don't we go to the next slide, please? And this is just kind of a snapshot of the industries broken down and where our fastest-growing industries are. So it wouldn't surprise you all that our largest industry that we serve is software and technology. We continue to see a lot of growth, a lot of adoption, a lot of expansion in the software technology space. That's going to be a critical pillar to us expanding on that bridge to a billion dollars.
But there's a lot of other exciting areas of growth and levers that we're pulling here. One of which that I would call out is financial services. Financial services is becoming increasingly more significant to our business. And we've actually, and I think it's a testament to the reliability of the platform, the security of the platform. It's a regulated industry, but we're seeing a lot of momentum there. And as you can see, it's our fastest-growing industry. And we're also seeing a lot of growth in life sciences, transportation, logistics, healthcare. So a lot of opportunity across all these verticals. Now, we've been talking about this enterprise journey quite a bit. We're making investments in this space. We're investing in go-to-market. We're investing in the brand. We're investing in customer success. And this is paying off.
You can see over the last two years, our CAGR in the enterprise space for ARR is up 33%, so good momentum. We're progressing nicely. We're also adding a lot of high-value new enterprise logos in the process, and why that's important to us is a lot of these new logos, they expand pretty quickly. It's a great flywheel, and I could point to many customers to where we land in dev, and you see consistent expansions as more teams get on board because the platform is very viral. There's a network effect back to that personal impact that I was talking about at the start of this, so we're making progress there. We can go to the next slide, please. Okay, and you can just build this out, so we've gone through where we're going. We've talked about the business value that we can bring to the table.
We've talked about the personal value that we can bring to the table. We start in DevOps, and you heard Jen say that's our on-ramp. Software is eating the world. Developers are running the world. The thing that I'm so excited about being part of PagerDuty has been validated since I've been here. I heard about it before I got here, but our customers, the users of the platform, are huge fans. They're some of our strongest supporters because we make their lives easier, and they help us. We bring developers with us to expand into all these adjacent areas, and I'll give you an example, and we're going to talk about a few more. There's a very innovative financial services company. They work with millions of different companies to process financial transactions. We started with them in dev.
We started with them to help them take and prioritize the noise that they had to focus on, the signals and responses to issues, and make sure they maintain that great customer experience. We have moved into IT ops. We actually moved into business operations to help them with their customers to make sure that they're clearing their banking customers to make sure they're processing transactions efficiently. Then we've moved into security operations to help them across the enterprise if there's an event, if there's a security situation or a safety situation to make sure the right people are notified and it's remediated quickly. We've moved into SecOps to help them respond to security threats because they are in a regulated space. Obviously, security is very important, and we're providing great business value at the leadership level.
This is one of many examples that we have on where we start in dev, and then we expand across with either new products, new use cases, or new buying centers. Now, with that, I'm going to transition it over to Julia. She's going to talk about what we're doing to drive our message in the markets and how we're landing customers from a digital self-serve perspective. So Julia, over to you.
Thanks, Dave. So if we jump to the next slide, as Dave said, we have a huge addressable market and really an unmatched ROI across companies of all sizes, industries, and use cases. And while as many customers, as you've heard today, learn about PagerDuty through word of mouth, people are really passionate about the product, we want to make sure that teams everywhere understand our brand promise, which is to help them manage the time-sensitive, mission-critical work that's really essential to modern digital operations management. So to that end, I'm very excited that we've launched a new global brand campaign this month. And you're going to have the opportunity to see this during the break.
But in this new campaign, we're really bringing our brand promise to life through a series of ads that communicate the value proposition of PagerDuty, that uptime is money, and demonstrate how teams use PagerDuty in order to really save the day when these urgent, unexpected issues happen that can really adversely affect the business and the customer experience. So we're running the campaign globally, as I said. That's a first for us. And another first is that we're going to be running TV ads specifically on CNBC. You may have seen them already. And as we think about building brand awareness, here we mentioned developers and decision-makers are both the audience for the brand campaign. And that really goes for our go-to-market overall. It's built around our customers, and we break those down into these personas of decision-maker and developer.
And if we move to the next slide, I'll take you through these just quickly because it's really important in terms of how we structure our go-to-market. And the first persona is the developer, but also other practitioners across the organization because, as you've heard, we start in development, and the developers are often advocates for us across the organization. But we reach DevOps, IT ops, SRE, customer service ops are all practitioners who embrace PagerDuty because they're on the digital front lines of responding to this unplanned business-critical work that's essential to keeping the digital services always on. And especially in a world of full-service ownership and customer expectations of being always on, these teams need to respond in seconds or minutes, not hours, not days. So these developers are really at the heart of how we build our go-to-market.
And they really want ways to more effectively manage this unplanned work because they want to spend more time on innovating, right, and less time on reactive work. No one likes to spend time fighting fires. They want to spend time on innovating and building the next thing. And these developers, as I said, really become the champions in the business for us, driving adoption across the organization. And they're an important part of influencing the executives. And our second persona is the executive decision-maker. These C-level executives, so the CTOs, the CIOs, CISOs, customer service leaders, are all accountable for these initiatives, these large-scale digital transformation initiatives like cloud migration, digital acceleration, and DevOps transformation. And they really feel the pressure to adopt a more proactive approach to digital operations.
It's going to help them deliver that perfect digital customer experience in the face of all of this complexity, but at the same time, really increase the productivity of their teams because they're constantly under pressure, not just for the customer experience, but also the productivity of their overall organization, so we've built our go-to-market with these two personas in mind, and in doing that, we've developed a really unique go-to-market that leverages both product-led growth and sales-led growth, and I'm going to explain a little bit more about what I mean by that, so if we go to the next slide, in product-led growth, a developer or an individual can really take a self-service path to discovering, using, and purchasing the product and really engage sales and support as needed.
So with product-led growth, we're putting the developer at the center of the process and letting them drive how they want to come in and discover the product. And in doing that, we both provide education on technical trends that are important to them, things like DevOps, full-service ownership, and AIOps, as well as online product documentation and tutorials. So it's really easy for them to understand PagerDuty and get started with PagerDuty. But what's really most important in terms of enabling product-led growth is that the developers can come to our website and really just get started with a couple of clicks. Using our trial and our free plan, which I'll talk more about in a minute, the developers can really quickly experience the value of PagerDuty and engage on their own terms at their own speed.
And when they're ready, they can automatically upgrade to a paid plan in just a couple of clicks. So that means they're able to get up and running quickly with very little friction. And then we complement this product-led growth with sales-led growth and marketing outreach. Particularly for our mid-market and our enterprise customers, it's really important that we're reaching those decision-makers and helping them understand the value of PagerDuty. And we do that through events, executive outreach, business value assessments that we do in tandem with our sales and customer success teams. And then Julia is going to talk more about this in a minute. But this really helps the executive decision-maker understand how PagerDuty can take the risk out of digital transformation and how we deliver on that high ROI and that incredibly fast time to value.
At Summit, Jen mentioned Summit, and at Summit, we had executive sessions, and it was just incredible to first host our C-level executives from around the world, and it really gave us an opportunity to hear from them how important digital operations and business continuity are as a C-level imperative. This has really become an issue that is critical at the C-level, including the CEO level, so for us, this combination of product-led growth and sales-led growth has really been key to our ability to scale efficiently because it gives companies of all sizes a digital first way to start with the PagerDuty journey, and it enables our sales team to really focus on the highest value opportunities, so we wanted to, on the next slide, just kind of double-click on our free plan and the customer growth that we've seen with freemium.
And here we're taking a look at how our free plan has really accelerated the growth of companies on our platform. And as you may be aware, we launched the free plan last year. And the timing of the free plan ended up being incredibly advantageous to our customers because we launched it very early in the pandemic. And as you can recall, things were tough as we lost all of our face-to-face interaction opportunities. And this really gave our customers a low-friction digital first way to adopt our product. And what we've seen with the free product is it's really helped us widen the top of the funnel, attract more companies to the platform, which in turn gets more of that great word of mouth going across our customers and across all segments.
And as you can see here, the move to free has really accelerated our growth in enterprise and mid-market across both our free plan and our paid plans. And the focus on enterprise and mid-market is really critical because those are our highest value customers with the greatest TAM. So, of course, landing our customers is just the start of our customer journey. And I'm going to hand it off to Manjula to cover how we drive customer success and really help our customers improve their digital operations maturity with PagerDuty. So, Manjula, over to you.
Thank you, Julie. There is no better way to illustrate PagerDuty's expansion with an enterprise and mid-market with real customer examples. So yes, get ready. I'm going to give you customer examples. But first, we are grounded on a clear customer journey where customers are expanding multiple times during their contract term, whether it be one year or it be three years, from onboarding to deployment to business value expanding. And it's become a virtuous cycle. Let me give you an example for a financial institution in the financial vertical. As Dave said, we've had a huge footprint there now as we are moving forward and accelerating. As all of you know, in the financial vertical, some companies are quite old. They have huge technical debt. They have compliance to abide to. There are regulations.
And there's a fine balance between driving digital acceleration as well as based on what the customer is expecting, as well as keeping up with compliance and the regulations that they're after. So let me give you the example of Vanguard. And as all of you know, Vanguard is one of the leaders in the world in mutual funds. Vanguard's journey with PagerDuty started in June of 2019. The CTO organization wanted to drive a more focused operations maturity and bought less than 100 licenses for his organization. The success of PagerDuty actually started to rapidly grow as the chart on the right side. They quickly replaced Lotus Notes where they were keeping a lot of their event data and replaced it completely with PagerDuty. Very rapidly, the success expanded well beyond the CTO organization to investments, finance, retail, international, and security. The success proliferated across the organization.
And when we did a renewal last December, it was their usage in terms of license was in the thousands. The customer success group now is working very closely with them on future acceleration, current deployment, getting business value as we are going on this journey. Let's go to the next slide. But did you know? Did you know that PagerDuty ubiquity is because customers are driving new and different use cases? As the SRE, Site Reliability Engineering Leader at Loblaw says it well, "If technology works, the use cases will follow because PagerDuty is customizable, simple, and scalable." Did you know that PagerDuty is in food recall? Did you know that PagerDuty is in the manufacturing shop floor of maker of cancer drugs in the San Francisco manufacturing plant?
And did you know with the Olympics coming in, Discovery+, that is going to be doing live streaming and has built a digital operations platform that PagerDuty is at the core of it? So why is PagerDuty in food recall? Our journey with Loblaw actually started with, again, the DevOps and the SRE organization, as Dave has mentioned. And as it started getting very successful there, in parallel, Loblaw at a company level was focused on customer experience both in store as well as through their digital experience. What happened next? They started looking for food recall workflows. Why food recall? Because you and I don't realize food recalls happen multiple times a week. And they need to drive a real efficient process. This SRE leader leaned in and shared the power of PagerDuty.
It was established as the best in class, and now it's getting rolled out across 2,000 stores, all the way from food recall process on the shelves to the checkout counter across 50,000 employees, and you ask, "Why Genentech? And why did they go into manufacturing shop floor with PagerDuty?" It's because if you think about manufacturing shop floor, it's also a learning. They have to keep track overall due to safety requirements in terms of when does the operations go down. There are experts that actually the operators on the floor call during an outage, during a disruption, and this all needs to be monitored. We rolled this out in partnership with Genentech in the California manufacturing plant in six weeks. The operators are so happy with it that it is now expanding to other manufacturing plants across the country.
So it is a huge opportunity that we have in terms of our customers driving their use cases, and this is proliferating. Let's go to the next slide. Let me talk now about transformation at enterprise at scale because it isn't about new use cases only where PagerDuty is involved. PagerDuty is at the heart, as all of you have been hearing, of digital operations platform. Large enterprises, enterprises at scale, are driving large transformations. They're driving transformations because there's digital acceleration. They're driving transformation because of cloud migration. They're driving cloud transformation because DevOps transformation and acceleration. And companies, therefore, as a result of this and as a result of what has happened over the last couple of years, are focused significantly on customer experience. These are sampling of companies that we are closely working with across all verticals that are going through this transformation.
So let me walk you through one such company in the tech industry as we go to the next slide and how they are driving and activating the digital operations maturity model. This company is a leading tech company. They are moving from reactive to predictive. They currently are doing a very significant cloud migration to multi-cloud. They are also moving very aggressively in service management in DevOps. In addition, they want to minimize any disruption, degradation of their digital experience their customer has. And that is why it has become an overall customer experience agenda for the company. Therefore, the initiative that they are driving is monitored based on metrics and reported up to the CEO on a weekly basis. This company started with us with DevOps and overall service management. They are exactly where Sean was saying most companies are, reactive to responses.
And as they're doing this migration, and because it's a customer experience agenda, it has moved well beyond engineering to customer support, IT operations, SecOps because they're now building a central digital operations platform. What's interesting over here is we talk about are they moving towards automation? Are they not moving towards automation? Their 12-18 months goal is to move from reactive to preventative to implement preventative intelligence. Today, they are 20% with their remediation happening automation. 80% is focused on human beings getting involved. They want to flip that in the next 12-18 months. And that's why today they bought a runway automation for their big data business unit. And I know this is going to be proliferating quite significantly.
What I wanted to take you to take away from this is many companies are going through this transformation, and they're rapidly moving from DevOps to SecOps to IT ops and to customer support in an accelerated way. Let's go to the next slide. This is interesting in terms of business value that Dave talked about. Companies are not buying products because they're going through the transformation only. Customers want business value. They buy products for business value and business ROI. PagerDuty's rich operational data allows us to service business values in very unique ways. So let me give you an example in the retail industry of a large home development retailer that is multinational across the world. They started a journey with us five years ago. They have grown 20-fold with PagerDuty's products across the company. Just 25% growth in this year alone.
So what is this 55 teams, six weeks, 900%? Before the holiday season, based on compliance, 55 teams had to drive an automated operations platform, getting ready for the overall holiday season, which, as you know, in retail is peak. We partnered closely with them and deployed within six weeks, and they got an ROI of 900%. This is well above what IDC at a group level at an average was driving. This company is not only using PagerDuty in customer-facing operations but internal operations as well, all the way from pricing to external e-commerce. So in summary, I'd like you to take away three key points. Number one, expansion before renewal is a virtuous cycle. We are grounded on our customer lifecycle. Ubiquity of PagerDuty is not just happening where customers are finding us use cases, but PagerDuty is integral to these large transformations that are occurring. And third, rich operational data driving rapid business value is our strength because we do it in unique ways. I'll hand it over back to Dave.
Thank you, Manjula. And I think we're going to go to some Q&A now. I'd love to welcome Howard and Jen back. That's right. So folks, feel free to, I know that we had a couple of folks who we missed last time, so we'll give them some priority. So Will and Christine, if you can make sure that we get to the folks who we kind of didn't get into the last round. This becomes a bit competitive, right?
Thank you, folks. We do have a hand up from Matt Stotler with William Blair. Matt, if you'd like to join us.
Sure. Yeah. Thank you for taking the questions.
I guess first, you've shown this operational maturity roadmap a couple of times now, but I can't help but thinking back to the commentary that you guys have had previously about how none of your customers are sold out, right? Almost as like a visual representation of what the spectrum looks like. So when you look at your customer base and even the prospective customers out there, what does the distribution of those customers look like across that spectrum, and how does that differ based on vertical, company size, geography, and those types of characteristics?
That's a great question, Matt, and I'll take a crack at that. Can you hear me okay? I'm just having a little problem with my sound. Okay. Good. It's really interesting because someone like Fox, who I talked about earlier this morning and who participated in our keynote at Summit on Tuesday, they're on the far end. They've moved to proactive. They've integrated all of the different types of their operations in their environment. They've built a purpose-built modern stack to support a business that relies on seconds of getting it right. When you're launching a new show or it's an NFL football game and you have a problem, you don't just upset all of your subscribers. You also upset your advertisers, and there's just a steady revenue loss impact there.
Even they, when I say they're the furthest on the right, they're kind of in the middle of that continuum because Paul said to me as recently as Monday, "Hey, I really want to push the envelope and see if we can move more towards proactive and predictive, and can we prevent these incidents from happening at all?" And he's not talking just about technology incidents. He's like, "How do I get an early warning on things? How do I get my team swarming around potential opportunities as well as incidents?" So someone like that, who we describe as being advanced to anybody selling to a CIO or a CTO is going to say that team has a lot of foresight. They're kind of in the middle. And until every Fox employee is on PagerDuty, I feel like there's a big opportunity.
We have customers that use us for critical event management. That water incident is an example of that, but they also are using us for emergency response, etc. So that's one of the reasons why we believe in kind of the long runway of the available TAM, even within our customer base. The largest, most regulated customers that depend highly on physical data centers, in-house builds or legacy systems, mainframes, etc., they tend to be furthest on the left. They're earlier in their journey. They're in the process of doing things like reshoring their development community or in-sourcing their development community. Historically, large auto companies outsourced all of their consumer-facing or dealer-facing app development to others, and now they're saying, "That has to become part of our core competency." So they have a longer journey. They're earlier in that journey to go, but some of them are leapfrogging.
They're making, I use the auto industry as an example because of connected car. If I go to start my Audi with keyless entry and it doesn't work, that's a real bummer, right? Or if I'm in a Tesla and the Tesla stops working due to a software upgrade in the middle of the fleet, also bummer. Doesn't happen very often, thankfully, but we know there are software issues in these consumer products we use all the time. And so I think there is some variation by industry. If I had to really generalize, I'd say highly regulated is earlier in the journey. Digital natives are further in the journey, but I don't see anybody past the halfway point, frankly. And then when you look at it by function, by use case, our customers, to Manjula's point, are in very different places.
The last thing that I would say is Sanjeet pointed out the mid-market where we see a lot of high-growth digital native companies. And one thing we haven't talked about in a while is their headcount growth drives our growth, right? So we're a user-based metric. You look at the hiring environment and the challenge with talent in the tech industry, right? Every time these teams add tech-savvy employees to their business, they become potential PagerDuty users as well. And then the last thing that I would say is there's a lot of companies that are trying to make a transition from central IT, and they're changing the titles of their employees from sysadmin to SRE, but just because they've changed their names doesn't mean they're proactive or mature in their DevOps transformation.
So some of our customers rely more heavily on Manjula's team to help them deploy best practice, not just our software, to help them drive change management as opposed to deploy the software. And that's where I think there's a large partner opportunity, not just to find and identify and become part of these digital transformation programs with large SIs and big partners, but also to help those companies move more quickly. And we saw, even with the digital acceleration in the past, this really nice shift of customers going, "Okay. Now digital is mainstream, and it's the core of my business as opposed to a secondary channel for me." But they're also dealing with a lot of other issues like security risks.
So just the increase in ransomware attacks, the increase in phishing is putting pressure on teams, and they're starting to think about that journey, like, "How do I get ahead of that?" Because it's not if you will get hacked or breached. It's how you respond when it happens. So response has become a front-of-mind issue for CEOs. Every audit committee I'm in, on every board I'm on, it's conversation. What does that response look like? So it's not how many incidents do we have, but how do we respond to them? So leadership is much more involved and much more well-read in on some of these issues than they were in the past. And that, to me, presents an opportunity for some of these customers to move faster along that continuum .
Just one final comment on that, Matt, is that Sean mentioned when he put up the operational maturity model that it's not something that you can ascribe necessarily to a whole company. So you often find that within different teams, they're at different places. And that's part of the beauty of PagerDuty is that you can have one team starting on PagerDuty. You don't need the whole company. So in enterprise, you often see different speeds of progress. Smaller companies, it's often more unified in terms of they're all at the same level. So our flexibility means that companies can adopt us at the pace that makes sense to them.
Yeah. Got it. That's helpful. And then maybe just a quick follow-up. Looking at the data around users on the platform and how the number of customers and users has grown with the new pricing model, and also kind of connecting that to this commentary about, obviously, the focus on being a multi-product platform, it seems like one of the interesting opportunities there is just having the platform in more people's hands. You kind of have almost an R&D multiplier, the ability to look at what people want to use it for and build out. So I mean, are you seeing that start to inform the product roadmap at this point, and is there anything that you can talk to on that front?
It's one of the reasons I hired Sean. Sean, do you want to take that question?
Yeah. I mean, the customer service product is because of the platform growing organically within an organization. So I think you're exactly right that as we expand our footprint, we get all sorts of new use cases. And just some of the ones I mentioned today, like IoT device management, security event orchestration, these are all use cases that are organically expanding on the PagerDuty platform. And so now we're starting to look at, "Okay. How do we templatize this work, so to speak?" And that's that first pillar of deliberate flexibility and the flexible workflows. And that's what it's absolutely all about, is that the more of these use cases we can mine, then the more we can help the customers and help our customers really expand and get even more benefit, which just makes our application, our platform stickier and just helps them grow within their organization.
Yeah. And I would add one comment to that as well. This is part of why we are very positive on the success we've had with the pre-offering, right? Because that's definitely, if you look at the fact that we now have nearly 30% more customers on the platform than we did a year ago, that, of course, in the first instance means we're going to be getting far more insights into how people use the platform, and within that, when we see the growth in enterprise and mid-market customers particularly, which was growing at a healthier rate, above the growth rate of our customer anyway at 23%, you add in enterprise and mid-market companies that are in three, which represents future opportunity, that growth is far more significant, so I'm really positive about the impact that has both in terms of understanding how our platform is used, but also for the ongoing economic opportunity.
Got it. Thank you.
So I realize we've probably got time for one more question. So Chad, I'm going to let you go because I think you were in on the first round too. Great. Thanks for taking my question. So maybe this is a different angle on the previous questions about a question about platform adoption and where we're at there. In the prior two days, we've heard a handful of sessions that have talked about integrating all these different signal vendors, whether it's Sumo Logic, Datadog, New Relic, Splunk, whatever, into your platform. And essentially, you being there for this customer or these customers, the real-time incident system of record, let's just say, and platform that all of these signals feed into. I guess, how prevalent is that?
I just think, to a certain amount, the misperception on the street is you're one of those tool vendors, right, not necessarily a platform vendor. It's not bad being those tool vendors because we'll take that Datadog valuation, right, and growth rate. But it just seems like there's a disconnect there in terms of your role in this whole ecosystem and being who I am, pushing a little bit harder on why we're not growing faster if we're truly this platform vendor. I think it's a great question, Chad. Just to speak to the market sort of understanding the platformist nature of how PagerDuty operates, I think the market is starting to get it. Just even, like I said, the emergence of the concept of domain-agnostic AIOps and how important AIOps is.
In Gartner's report, they basically talked about the fact that there isn't an IT organization that doesn't need AIOps right now, and we are the modern version of AIOps. We started with a distributed product, and what that allows us to do is support distributed teams, dev teams, in addition to centralized IT teams, as opposed to just supporting centralized IT teams. It allows us to see the whole ecosystem, and that not only enables us to be a system of record and a single source of the truth, it enables us to be the system for engagement, so many of the other products and services out there, the monitoring and observability tools, the security monitoring and threat intelligence environment, they're capturing information and insight, but they're pointing it through a single pipe to a single organization and actually contributing to the noise. We actually then orchestrate that response.
This is a value chain. It's a life cycle, right? I think that is important. Why isn't it growing faster? The market is still meeting us. You think about just the complexity of the change management to get to an environment where you're re-architecting and modernizing your IT stack and then changing people's behaviors, etc. I think we've seen some acceleration in the last few quarters post the pandemic that's driven by the consumer pull, that's driven by this transformation to most of our customers having to become software companies and most of our customers having to listen hard to what their developers are saying. As I said earlier, it's still a pretty nascent market, and a lot of our customers are early on the journey.
but once they get on the journey, you saw that curve that Manjula shows you, once they're on that journey, then it becomes pretty viral, and you see this sort of uptick. I think one of our challenges in the past, and you kind of alluded to this, has been brands. On one hand, we're really well-known for our first product, which is almost a decade old. The downside of that is we're really well-known for our first product that's a decade old, and we have to expand our remit, which is why you see us making investments in brand development. You've seen our first televised campaign. You've seen us try and start to educate the market, and it's been really, I think, encouraging to see over the last 18 months, people using the term digital operations, people starting to really understand what we do.
And I think it's also really validated by Product Attach. But this is a big transformational effort for our customers, and we're still getting at it pretty efficiently, right? So that's sort of how I think about it. And the team would all tell you that I'm always on their case to grow faster. That question, they hear every morning for breakfast.
Perfect. That's a big part of your job, so I kudos to you. So thank you for taking my question.
Well, thank you, Chad. And thanks for the questions so far. So we're now going to take a break for five minutes. So we'll restart at 10:10 A.M. Pacific time. But we do have a video. You'll be able to watch the commercials that we have running on TV now during the break. So speak to you in five minutes. In today's digital world, uptime is money.
And issues can cost millions. That's why over 13,000 companies and more than 60 of the Fortune 100 rely on PagerDuty to identify issues and automate responses for fast resolution. Yeah, like that. Keep your business always on, customers happy, and protect your bottom line. PagerDuty, ready for anything in a world of digital everything. This is mission-critical work, and every second matters. Every second matters. Oh, no. I always make a move. When seconds matter, our teams are ready for anything. Okay, Noah. Our critical delivery operations are extremely reliable. PagerDuty, ready for anything in a world of digital everything. In today's digital world, uptime is money. And issues can cost millions. That's why over 13,000 companies and more than 60 of the Fortune 100 rely on PagerDuty to identify issues and automate responses for fast resolution. Yeah, like that. Keep your business always on, customers happy, and protect your bottom line. PagerDuty, ready for anything in a world of digital everything. This is mission-critical work, and every second matters. Every second matters. Oh, no. I always make a move. When seconds matter, our teams are ready for anything. Okay, Noah. It's this one. Our critical delivery operations are extremely reliable. PagerDuty, ready for anything in a world of digital everything.
Well, welcome back, folks. That was a very quick break. Delighted to be able to lead us through this next session. We'll be finishing at 11:00 A.M. Pacific time. And I have a couple of items that I wanted to walk through. And then we will also have PJ, Phylicia Jones, covering the section on ID&E culture with you folks. And then we'll have some additional Q&A right at the end. So I wanted to start off today.
I'll be doing a quick grounding on some of our most recent results just for those folks who are newer to the story, just to understand where we've come from. I will then spend some time around our total addressable markets since it's a while since we've visited that topic with folks. And then I have a number of slides that I'll be walking you through around the progress that we've made on some of those key growth drivers or building blocks that Jen mentioned earlier in our fireside chat. And then we'll put that into context for you in terms of as we think about our growth trajectory over the next few years. So to start off with then, next slide, please. Just to ground folks from a revenue perspective, our most recent quarter, we grew at 28%. And in fiscal year 2021, we grew at 28%.
So that gives you some idea of the size and scale of the business, $214 million in FY 2021. Next slide, please. We continue to deliver best-in-class software gross margins. So our gross margin was 87% in FY 2021. In Q1 of 2022, it was 85%. We have a target gross margin range of 84%-86%. And that's typically where we have operated. Next slide, please. From an OpEx perspective, this gives you a view on how our OpEx as a percentage of revenue on a non-GAAP basis has trended over time. In our most recent year, fiscal year 2021, we had 50% of revenue was spent on sales and marketing, 25% on R&D, 21% on G&A. We obviously are making investments. Some of those Dave and Julie spoke about a little bit earlier from a sales and marketing perspective.
Additionally, there's also a focus on international, which I'll touch on, and partners. R&D, you've seen the results of some of our product innovation. That continues to be an area of focus. We expect to have high expense in R&D to support the innovation, and we continue to drive economies of scale in G&A. Next slide, please. The one thing that is an important part of our growth as a company is our ability to expand our customer base, so this shows the trend of our dollar-based net retention over the last five quarters. We have had our dollar-based net retention for the last two quarters above 120%, 121% in Q1. We're typically expecting this to be in a range of 118%-124%. Our enterprise dollar-based net retention was above 125% in the most recent quarter, and our ARR that has churned on an annual basis remains below 5%.
So definitely industry-leading. Next slide, please. This last year, we were operating cash flow and free cash flow positive. We do expect as a company that we will dip in and out of being cash flow positive. We do take a very prudent approach to how we manage our capital. We do have a very healthy balance sheet with more than $550 million in cash, cash equivalents, and short-term investments. But we have always been very prudent in the management of cash. Next slide, please. And this gives you a view on operating income and margin from FY 2020 to FY 2021 for the full year. We improved from a negative 17% to a negative 8% in terms of operating margin. So that gives you a little bit of a view of the company and the high-level metrics from a performance perspective.
So now I'd like to switch gears to chatting a little bit about the total addressable market. So at the IPO, we spoke about this TAM for PagerDuty as being a $25 billion TAM. So if we go to the next slide, I'd like to just talk you through some of the ways in which we've seen this build. And if we think about some of the core areas of our TAM today, just focusing on on-call management and incident management and what that means, we see that as a $22 billion TAM. And we have calculated this based on the number of users that we see as potential targets within that space. So if we build the slide to the next slide, you'll see that we consider a number of different constituents as being potential targets of this: developers, folks in IT, customer support, security, and other stakeholders.
And when we look at the pure user counts, we would see ourselves as being less than 2% penetrated in developers, less than 2% in security, and less than 1% in all the other stakeholders. And that TAM then breaks down on a relative basis. If we think about it as our TAM for developers, about 7 billion, our TAM for IT, 7 billion, customer support, 6 billion, and security, 1 billion, and other stakeholders, 2 billion. And that's really just in terms of the incident management TAM, if you will. The next slide shows you how the users break down. And these are the numbers that have built into the calculation of this TAM.
So if you look at the expectations around how some of these user populations around the globe will grow, we see that as of 2021, the estimated number of developers around the globe is 22 million. It is expected that this will grow to 28 million by 2023. If we look at the growth in terms of IT growing from 2021 to 2022, and in terms of customer service expectation, that would be a relatively slow growth over that period of time. But if we look at PagerDuty users today, the growth that we're seeing in terms of all of those users are, in fact, growing at very healthy rates. If we look at security, growing at 67% on a compounded basis, customer service at 51%, developers at 35%, and IT user growth at 19%. So that gives you some view on how we're thinking about that TAM.
Of course, with our event intelligence offering, so next slide, please, that also takes care of part of that $25 billion TAM, so if we think about AIOps, particularly servicing the needs of developers, that adds another three billion to the TAM, and that then gets us to the 25 billion that we often reference. Since the acquisition, though, of Rundeck and the opportunity that we've been evaluating from an automation perspective, next slide, please, that adds another 11 billion in terms of the opportunity, so this is if we look to automate everything with Rundeck and PagerDuty, this then builds us to a $36 billion TAM, so we thought it would just be helpful for folks in terms of context, in terms of seeing that this is a really large opportunity. It's an opportunity across all these sectors where we are early.
Even if we were to add together what we know in terms of competitors' contribution to accessing that TAM, it is still low. So early in a very large TAM. What I'd now like to do, though, is shift gears to chatting about our four primary growth levers. So the first one really around multi-products, multi-product land and expand. The second is around. Oh, sorry, could you go back one, Joshua? The second is around accelerating our growth in new markets. And those new markets can take the form of international, federal, or partners. The third is really about new use cases or expanding to adjacencies. And we spent a little bit of time chatting about that. And one of the largest growth drivers for us is extending our leading enterprise.
And that's our leading enterprise and mid-market across verticals as a product that is a platform that is not specific to a vertical. So I'm going to take you through these one by one and just share some recent data with you that gives you some idea of the momentum that we are seeing in this space. So the one that's particularly encouraging from a multi-product perspective is when we look at the digital operations SKU, which is essentially representative of our most advanced features around incident management and AIOps in a single plan for customers. And if we look at how that has grown as a percentage of total ARR, back in Q1 of 2020, it was 9%. In Q1 of 2022, it was 22%. That was more than a 90% growth rate year over year in Q1 of 2022.
So really pleased to see how the momentum that we're seeing with the digital operations SKU, which validates our approach to, in fact, having a multi-product view and ensuring that we have clear differentiation in terms of our product. The other measure that we've looked at is if we look at the digital operations plan, if we look at event intelligence, if we look at our automation product, and we were to have a look at how those are attached within enterprise and mid-market customers. The attach rate within enterprise and mid-market has shown a steady increase. In fact, for enterprise customers, we've reached a 19% attach rate as of Q1 2022. And for our enterprise and mid-market customers combined, about 15%. So this clearly indicates that the model is working, that there's opportunity for us to drive incremental value from a multi-product perspective.
So moving on to the next slide, expanding into new markets. I wanted to just take a data point around international because I think this is of interest and demonstrates where we've been successful with a particular model, the opportunity we have to replicate that model elsewhere in the world. So if I look at international just in general from an annual recurring revenue perspective, that's been growing above 30% the last two years. And for EMEA, that's been growing above 43% the last two years. If we look at paid customer growth in international, that's been growing above 20% for the last two years and in EMEA above 19%. And our total paid customer growth, that's sorry, just for mid-market and enterprise. And total paid customer growth has been healthy in those regions too.
So the success that we've seen in EMEA with these numbers and in international more broadly makes it clear that this is a very real opportunity for us to be able to grow more broadly on a global basis. Next slide, please. When we look at new use case adoption, obviously, you've heard some examples from IoT use cases to organ transplant use cases to any number of other use cases. But the ones that we're paying particular attention to and have been tracking have really been about new use case adoption related to customer service and security. And that's not to say these are the only opportunities, but these are the two that we have been tracking.
The success that we've seen across both of these areas is demonstrated when you look at the growth in terms of the number of customers today that are using PagerDuty, typically within a dev or IT use case, but also in customer service and security, so from a customer service perspective, we have close to 20% of our customers are also using us in a customer service use case, and over 10% of our customers are also using us in a security use case, and when we look at the user growth across customer service and security, very strong user growth, which gives us, again, confidence in the ability to drive growth through new use case adoption or adjacencies, so next slide, please, and then, as the leader in enterprise, I wanted to just chat a little bit about the success that we've seen there.
So in terms of customers above 100K, as of Q1 of FY 2022, we had 458 customers above 100K. That represented a 32% growth year over year. But we steadily are adding to this cohort of customers. We've seen that customers over a million have increased by more than 50% per year for the last two years. Our average revenue per customer has increased from 85K in Q1 of FY 2020 to over 110K in Q1 of FY 2022. And the other element that's interesting is when we look at the enterprise lifetime value, that continues to improve in this segment as well consistently over the past few years. And our enterprise ARR, as a percentage of total ARR, continues to be a strong and growing contributor. So when we have a look at enterprise, sometimes the question is like, well, how early are we in enterprise?
So next slide, please. I wanted to share with you some of the data if we just look at the Fortune 100 and the Fortune 500 as key targets for us from an enterprise perspective. Since IPO, we've grown the number of Fortune 100 customers from less than 50% at IPO to over 60% today. In terms of the Fortune 500, we were almost a third of the Fortune 500 at IPO, and we're over 40% of the Fortune 500 today. We also went through an exercise to have a look at, well, how many of the employees within the Fortune 100 and in the Fortune 500 have we actually accessed in our PD users? Well, today, that's less than 1%. So it indicates a very wide open market if we were purely looking at it on an employee basis.
More interestingly, when we try and break this down to looking at tech workers, and this definition of tech workers comes from some research that we've done taking tech workers based on information shared on LinkedIn. So the information that we've collected here is specific to customers of PagerDuty. So even if we look at the customers that we have within the Fortune 100 today, and just incidentally, it turns out to be the same for the Fortune 500, we, in fact, have around 14% of their total tech worker population on PagerDuty today, which means that there's a lot of room to grow even within our existing customers within this space. So hopefully, these stats give you a view on the confidence that we have on how early we are in this space.
So what I wanted to do now was to take you through how we're thinking about this over the coming years and have put together a profile of the business at $500 million and at $1 billion. We've spoken about our aspirations to be $1 billion in revenue, but wanted to help you see how we're thinking about how we step towards that over time. So on the left, you can see our FY 2020 and FY 2021 numbers in terms of percentage of revenue and where we think we would be at $500 million and $1 billion. So our thoughts are that if we continue to grow around 30% as a company at $500 million of revenue, we would expect to have a profile with 40% expense on sales and marketing, 26% on R&D, and 14% on G&A, delivering an operating margin of 5%.
Our view is that by the time we get to a billion, if we are sustaining growth around the 20%-25% mark, then our expectations are that we would be seeing further leverage in terms of sales and marketing and G&A, but would be looking to maintain our investment in the R&D space. So this gives you a view on how we're looking at those numbers. Again, this is not guidance. So just to remind folks, this is not official guidance. There's no timeline attached to these, but it's really intended to give you a view on how we're thinking about things for the longer term. And just to give you some sense of how we would expect that to build up, I'd like to move to the next slide. In terms of those building blocks, it's the building blocks we spoke about previously since IPO.
Enterprise, which I've put at the bottom of the slide because that's really underpins all of the growth, but specifically around market expansion, multi-product, and adjacencies, we have expectations around how these are going to contribute to our growth, so when we think about market expansion, we think about international growing from 25% of our revenue today to over 30% of our revenue over time. When we think about federal, this is a vertical that, although it's small for us today, it is growing at a healthy rate of 35%, and that is why we're looking to make investments in federal and working towards FedRAMP certification in order to access what we see as being an important market. In terms of partners, our partners today contribute less than 10% of our net new ARR, our new business net new ARR on an annual basis.
But we would look to grow this to over 25% of our net new ARR on an annual basis and are making investments in the partner ecosystem and in terms of investments around marketplaces to be able to support that. With respect to multi-product, as I've shown you, we've seen some healthy attach in terms of the enterprise and in terms of mid-market. But that's clearly an opportunity for us to grow. And we would look to grow our attach of new product in mid-market to above 20% and in enterprise above 30%. And from a product-focused perspective, the AIOps with automation, some folks think of AIOps and automation as separately. Some folks put AIOps and automation together.
But when we put those two together for us as a key area of innovation and a key opportunity for us to both land in new environments and expand, we expect that to grow to be more than 20% of revenue. And then in terms of our adjacencies, we're looking to accelerate the early successes we've had in customer service and security. But certainly expect to see more in the way of business use cases, as we had mentioned earlier. So those are the building blocks that we've looked at. And these all really are with a view to contributing to us leveraging on the foundation that we have already laid with respect to growth as a company. So at this stage, I am going to pass on to Phylicia Jones. She is going to then take you through just some thoughts and share some of the programs that we have in place around culture, ID&E, and ESG. Over to you, PJ.
Thank you, Howard. All right. Just want to bring up the slides. While those are coming up, I'm Phylicia Jones. Hello. I lead talent development here at PagerDuty, and I joined the company in 2018, and I have personally grown with our culture. On the next slide, you can see a brief bio about who I am, but I am proud to have the opportunity to share how we at PagerDuty are doing the challenging work of advancing our ESG mission and vision for our employees and our communities, so for me, I get to lead this work every single day, from leading our Black and Latinx ERG Array to designing our ID&E programming so that our employees feel safe and they see a sense of belonging, and I'm excited to actually highlight how we're building a sustainable culture that scales with our global growth.
So let me just say we do not shy away from this challenge. All right. So next slide. So on our last two previous earnings call, we highlighted our ESG efforts, as you can see right here. And these are six areas where we're making concrete investments. Now, let me direct you to our pledge 1%, which you can see here in the middle of the slide. Jen already mentioned how we are making this investment, and it's worth highlighting this again. So social impact is actually at the heart of how we run our business and serve our customers and our employees and our communities. Through PagerDuty.org, we continue to deliver our pledge 1% initiative, which allows 90% of our employees to use their volunteer time off to give back to their communities. We also deploy over $1 million in grants through our PagerDuty.org fund.
And we've captured our efforts in our first annual social impact report published in March 2021. Next slide. All right. So now that you can expect, we love reporting here at PagerDuty. It is a way in which we can measure our magic, and it shows how we are making progress and where we need to pay attention. So our diversity report in September 2020 highlighted where we need to focus our efforts across our key employee populations. Now, I encourage you to check out our second annual diversity report that is going to be released in September this year to learn how we're learning about ourselves and what we actually are doing about actually investing in our diversity and efforts. So next slide. Let's specifically take a look at ID&E. We want to be a billion-dollar company.
This means we have to be an organization that not only attracts talent, but retains talent so that our customers know we have an engaged, diverse, and inclusive team solving their biggest problems. A key part of scaling our culture is not shying away from ID&E. We know reaching our goals requires us to lean into challenges that keep us PagerDuty. so it's constantly thinking and taking action on, one, where do we want to be? two, where are we now? and three, how do we get there? so next slide. so you've heard this word intentionally a couple of times. and we are intentionally on our ID&E journey. and we want to lead with empathy and advance our mission and vision. so our ID&E mission is to activate the potential of all Dutonians across actually, all Dutonians through systemic and programmatic equity, sustainable community development, and life-altering learning experiences.
Now, how do we get there with a people-first, data-driven organization where power and opportunity is equitably distributed across the mosaic of Dutonian identities? Let's just kind of sink that in for a second. Okay. Right, so next slide. So while our mission and vision speak for themselves, what also matters is that we collectively turn these words into action. So here are our key goals that I'll walk you through shortly. So let's take a look at these goals. Are these goals challenging? Yes. Are we afraid of challenges? No, we are not, and you can see our top three areas where we want to expand, be transparent, and continue our impact in our communities. Now, we understand that we have to act everywhere at once in order to create change, and I'm going to highlight what we're doing to take action in many different places. Okay. Next slide.
Okay, so we're currently building a connected thread, and I like to use that word of an ID&E central nervous system into our entire employee experience, so we are redesigning our hiring to be more inclusive so we continue to build diverse teams, to learning together as one team as we are investing in inclusive leadership learning so that we actually develop an inclusive common language and mindset for how we get work done and how we work together. We also do not shy away from publishing our views, whether it's our no-tolerance policy toward racism or our commitment to working with diverse suppliers. As we see changes, there may be other stances we will take, and we'll be ready to do so. All right. Next slide.
Now, you know by now, here at PagerDuty, we love data, from collecting it to listening to it, to analyzing it, then reporting on it. When it comes to ID&E, a lot of the areas that need change are systemic, and they require measurement to uncover real progress, so it is through our pay transparency and demographic self-ID initiatives. This is allowing us to create more intentional and targeted solutions versus guessing and having no impact on our programs or on our people, so we are all about real-time impact here, and we want to show people in and outside the organization our progress and efforts each year when we deliver our annual diversity report for how we are making systemic changes. Now, our goal is to lead by example here and have people learn from us. All right. Next slide.
And in this last area, I will say I am personally proud to have been involved in our Days for Change launch this time last year and also to be part of our quarterly programming that kicked off last month through my involvement in Array. Our Days for Change is focused around four key themes: educate, activate, demonstrate, and donate. Now, why? Because we simply care. And we want change to happen and to stick. And we have grown this initiative into a quarterly program enabling Dutonians to come together to amplify, uplift, and support underrepresented communities. This is also a time to highlight the importance of voter engagement for us and initiate grantmaking to key organizations advancing equity in underrepresented communities. So we're excited to launch our Q3 Days for Change effort around World Mental Health Day in October. And this will be led by our ERG, PagerDuty.
This is an employee resource group representing our Dutonians with visible and invisible disabilities as well as chronic medical conditions. All right, so the last couple of slides I want to actually highlight here is that we cannot talk about ID&E here at PagerDuty without actually highlighting our employee resource groups who do the work, make the time to advance our ID&E mission and culture that we're building here. Here are just three examples that I want to highlight. Right now, Rainbow Duty has integrated Pride Month programming into our summit experience through fundraising and key discussions. We had Sister Duty back in March host a series of women leader-led discussions for Women's History Month for employees to hear views and different stories around leadership and just simply excellence, and Illuminate, this is our newest ERG for our Asian American and Pacific Islander community. Again, employee-initiated and employee-driven.
So we are proud of all the relentless time and the efforts that these groups volunteer to elevate our culture. Okay. So I know I've covered a lot here. So on our next slide, I just want to leave you with our North Star around ID&E. And again, I hope you can hear, I am just very passionate and proud to have worked here and to see and have grown our culture around ID&E. And I'll just leave you with our North Star. So ID&E is a business strategy at PagerDuty. And our long-term success as a business requires us to foster an inclusive, diverse, and equitable workplace that is representative of the communities and identities that we serve both in and outside the workplace. All right. Thank you.
Thank you so much, PJ. Your passion is always on display. So thank you for that. I'm sure folks enjoyed hearing from you how important that is and how important that is for us as a company. So at this point, folks, we are going to have another brief 15-minute Q&A session before Jen closes out with a few final comments so that we can finish on time. So we'll go to the Q&A. And I think we have one question here already in the queue from Sanjit. So Sanjit, do you want to ask that, or I can just repeat it, but maybe you join us?
Sure. Well, I think the spirit of the question was to talk about growth in the near term, let's say in 2021. How does the dynamic between new business growth and the renewal base from last year that might have gotten hit because of the pandemic, how does that play out in 2021? Are you seeing new business accelerate, but you're still sort of in the mid-20s because there's a lower renewal base? That's sort of question number one. And then I'll take the opportunity to talk about the longer-term growth trajectory. We talk about getting to $1 billion. You didn't set necessarily a time frame, but how do we think about maybe some intermediate milestones? Like you're at roughly $250 million today. What would be a reasonable time to hit $500 million on the way to the $1 billion-dollar target?
Sure. So Jen, do you want to?
Yeah. I'll take the first part of that question and try and control my bullishness over the second part of the question, and then I'll let Howard answer it because I'm supposed to be on best behavior, but I would say that while we saw a lot of customers get hit in some new logo acquisition be a little bit slower than usual during the pandemic, at the same time, the freemium offering allowed us to retain customers that otherwise couldn't afford to continue on the product, and that creates the opportunity for us to continue to expand the customers, so when I think about the renewal base, what I'm really pleased about is the growth rate in total customers on the platform is higher than our growth rate in paid customers has ever been.
And that really is the result of reducing friction in the trial flow and offering that freemium product in the market. And that has certainly been successful in mid-market and enterprise where we have the biggest expansion opportunity. So I don't expect to see, I think you referred to, kind of a headwind from the lower renewal base. In fact, I think there will be opportunity to expand and convert many of those freemium customers that have come into the business. And a few things that I like that I'm seeing in market when I talk to customers is continued momentum around more strategic deals, around multi-product deals, around the digital operations platform. And that's not limited to enterprise. We're seeing that in mid-market. We're seeing smaller customers take on things like event intelligence.
So the multi-product effort, which we've had underway for a number of years, is really starting to pay off. And then I'd also just point investors back to our retention. We have very strong retention, greater than 95% across segments on the platform. Net dollar retention, we've seen momentum in that number, particularly in enterprise where we've been above 125%. And I feel very good about the momentum in the business, not only our ability to execute against it efficiently, but also in the demand signals that we're seeing from the market, particularly around new use cases. And then there's the last thing I would mention is our lands tend to be very small, right? And then we expand in terms of number of users, number of products, number of organizations, and functions on the platform. So it can be patient growth, but it is quite predictable growth.
And that, I think, has been one of the hallmarks of our business that we don't need huge lumpy deals to get to our forecasts and deliver on our guidance. And in fact, as we've deepened the bench strength in the sales organization, as we build out our brand, as customer success really hits its stride, I actually think that momentum is going to continue. And I'm confident, as I have said in the past, that we can grow above 30%.
Yeah. And I would just add to Jen's comments about 30%. We're not restating guidance here, so I don't want anyone to get confused. But our most recent guidance that we gave for Q2, the midpoint was at 29%. I think that was reflective of the confidence and the momentum that we see in the business. In terms of the longer-term model, I try to kind of step it at the $500 million mark and the $1 billion mark. The assumption around those numbers is that $500 million says that we're still growing around 30%. So that's a couple of years if you were to look at a timeline. When we look at the $1 billion number, we still feel very positive about. We're not going to run out of runway at $500 million. There's plenty of opportunities to still grow at a healthy rate like in the 20s through that period. So this is not taking into account any inorganic activity. This is just looking at the business as we see it today.
Very helpful, Howard. Thank you.
Okay. All right. It looks like Matt Hedberg is up. Hey, Matt, how are you doing?
Hey, good. Hey, Howard. Hey, Jen. Thanks for this day. It's been great. I think I've known you guys for a long time, and it's not a PagerDuty conversation if we don't touch on competition a little bit, and I know somebody asked about some of the observability players earlier, but can you talk about sort of the success that Dave highlighted a lot of it, and Howard you did this well in your prepared remarks about multi-product sales? Can you give us a state of the union on how you kind of stack up right now on some of these competitive deals when there are bake-offs, sort of how your platform continues to shine above your sort of traditional competitors like VictorOps or Opsgenie?
I can take a crack at that and welcome anybody else on the team that wants to join in. And in PagerDuty tradition, I'll just remind everybody that most of our deals are still greenfields. We have a lot of customers that are just getting started in this. And when we do see competitors, what we're seeing is increasingly we are winning because we can very quickly prove a much faster time to ROI, a much better time to, sorry, a much larger ROI, a much faster time to payback, and a much faster time to value. And with regard to some of those traditional on-call automation competitors, we've advanced our roadmap substantially well beyond that in terms of the multi-product platform, and they've largely stayed in place. We're not seeing them in enterprise, as I've mentioned in the past.
And they've largely been continuing to compete on price or been tucked into larger platforms where they're just not seeing the same level of investment and innovation that our customers see from us. And so that has continued to be, I think, a really positive trend in terms of how we've extended our leadership and deepened our moat there. And even with some of the confusion and noise that we hear coming from the APM space, observability, or traditional ticketing, I think customers in the market are really understanding that there's an old way to do things that was really designed around legacy on-prem data center-centric infrastructure. We are the new way of doing things. It's swarm. It's instantaneous. It's designed around the cloud, designed around distributed teams, which frankly has, I think, resonated extremely well in the hybrid work environment.
So in my view, our win rates continue to be very strong. We are extending our lead as it relates to product and innovation. And bringing together the combination of insight, engagement, action, and automation has really set us apart and made it harder and harder for the point solution competitors to compete with us. The last thing that I would mention is just around our integration ecosystem, which is an area we've invested in steadily, 560-plus integrations that allow us to capture a much broader view, provide significant visibility and intelligence in automation. But we also have built a huge data set around responders and understanding who they are and what they do and psychologically how to help them be more effective in these environments.
And finally, I would just say it's the only platform where you can do everything you need to do from a real-time operations perspective on a mobile device. There is nobody else in the market doing that. So I think we are well on our way to becoming the Operations Cloud for modern enterprise. And I know Sean may want to add to that as well.
Yeah. I was just talking to a customer the other day that did a bake-off against the incumbent that was in there, one of these competitors that was on more of a legacy traditional approach that I talked about, and out of the box, we improved their mean time to acknowledgment by 50%. This is just how quickly can we get the responder engaged, and then taking it one step further, we also improved their mean time to resolution by another 50%. This is just out of the box without doing much at all, and much of the magic, like we've talked about automation and some of these other best practices, just out of the box against the incumbent.
And now their SRE group is taking Rundeck, and they are just off to the races with now that they've seen the power and the capability of what we do out of the box, they're starting to automate more of that response workflow and the remediation to get even more value out of it. So we expect to see even bigger improvements going forward.
That's super. If I could squeeze one more, I don't know if Dave is still on the panelists here today.
Yeah.
No, hey, Dave. I guess Howard noted sort of the progress you're having with partners, and I think leverage with geo-size is certainly something that we look for all companies that are scaling to $500 million and $1 billion and beyond. Can you talk about incrementally sort of what you guys are doing from a go-to-market perspective to drive a bit more of that geo-size momentum? Because it just seems like such a powerful flywheel effect for you guys.
Yeah. Happy to take that one. So we are focused. So we brought on a global partner leader recently, which we announced, Timm Hoyt, a lot of industry experience, really excited about having him on the leadership team. So we are focused on the GSI space to help our customers because we've talked about the technology transformation customers are going through, but there's also this cultural transformation that companies have to go through as they modernize themselves. So we're engaging with GSIs. We announced a global partnership with Tata. There's a few benefits there with that relationship. They can actually help us as we expand internationally. So there's going to be work there. But when you talk about partnerships, we've hit on a few areas. We've got great momentum in the cloud provider space right now.
And that's another way for us to extend our reach through their marketplaces because if you think about the tailwinds that we're associated with, cloud migration is a big opportunity. And what the cloud providers see in us is when people have digital operations maturity and can operate more efficiently in this complicated environment where you've got on-cloud, hybrid cloud, microservices, all this stuff, we reduce risk and help them to move workloads faster to the cloud. So we're appealing to those cloud providers to partner with them. So I would say we're pleased with how we're doing there, but Tim's got a lot of expertise in that space, and we're really focused there. We've also spent a lot of time talking about integrations. We're going to continue to focus there because we help everybody integrate all the noise that's coming at them and then drive that response and efficiency.
Thanks, guys. Thanks. This is great.
Thanks, Matt. Joshua, I think you're almost at time, but you can probably take one more question before we let Jen wrap things up.
The next hand I see up comes from Derek Wood with Cowen & Co., please. Derek, if you'd like to join us.
Great. Yeah. I'm here. Thanks. Question for you, Dave. At what point in the land and expanded motion do you start to think, "Well, I can sell a site-wide license, if not across all employees, maybe across all ops teams?" And I guess just more broadly speaking, you've expanded the portfolio, the packaging, the messaging has gotten broader. Do you think about getting more aggressive with top-down cross-department sales, or do you really want to keep focused on the land expand motion?
Good to see you, Derek, first off, so here's what I'll say. It varies, and we've talked about that maturity model, so we've got certain organizations that are ready to adopt more, and typically how it works is we'll land in dev with a particular enterprise, and it will spread virally. We've got that network effect where the more people that are on it, the more effective they become, the more work they can distribute. They can get back to innovation. They can work on writing code, deploying new features, all that great stuff, and we're taking that in IT. We're taking that into SecOps.
We do have conversations where customers, when we take that business value discussion to the CTO, to the CIO, even the CEO is getting engaged now, where they say, "Geez, the more people that use this, the more value we get out of it." And we're looking at bigger digital ops deals. So typically what you see is you'll see us land in the enterprise space, expand, expand, and then you'll start to see bigger expansions. The thing that I'm really excited about is we've got a lot of current customers where we're in that process, and Manjula kind of walked through the Vanguard example today. But I haven't met a customer yet that doesn't want to talk about automation.
So we're the only company that can take all this noise, help you prioritize what you need to focus on, and say, "Hey, you can offload some of that remediation or diagnosis to a machine, and then you can get the people involved." So enhancing what we do. So that's another angle in which we're going in as well. So there's not one cookie-cutter like, "Hey, we're going to just go wall-to-wall." That's great. If people have the desire and the appetite to do that, we will go have that conversation and make them successful. But typically, it's a few lands, and they get bigger along the way.
Helpful. One other question. You mentioned financial services being the highest growth vertical. Why is that? Is there a lot more transformation happening? Is there something you've done from a branding perspective for PagerDuty that's really helped inside that vertical? What are the drivers behind that?
Well, I think every industry is in the midst of a digital transformation at some level. And what we've seen is, and Jen mentioned this, I mentioned this on my slide, the largest of the large financial institutions and leaders in the space, we've built that trust with them. They see the reliability of our platform and the security. And so now they're going through these transformations. You can see in the executive ranks in a lot of these fin-serv companies, they're bringing in really technically sophisticated, modern cloud folks into these organizations that are helping to drive this transformation. And we're seeing it more and more. And I also think that people are seeing the success of other companies and how they engage with their customers and deliver that customer experience and are talking amongst each other. And we're the benefactors of that word of mouth. But it's the leaders in the space and then the innovative disruptors are certainly driving that agenda as well.
Yeah. I would jump in there too and say one of the reasons that we see a lot of growth in financial services is because we really stand alone in that vertical. There isn't anybody that's demonstrated the level of resiliency at scale for that industry where it's highly regulated, whether it's sort of modern payments and fintech or it's more traditional 100-year-old institutional banks. They're up against the same governance framework in most cases. And so they have to partner with organizations that are super reliable but also meet the compliance requirements that they're up against on a regular basis. And that's just created, I think, a pretty significant moat for us there. I would also say that the pandemic accelerated even the mindset, much less the adoption of cloud-native solutions in that space.
So if you think about Zoom, who is a terrific customer and partner of PagerDuty, two years ago, a lot of the investment banks were like, "We can't allow Zoom in our organization because of security. We need to go through a two-year infosec process," etc. They were saying, "We can't have platforms like PagerDuty that leverage our data work in our environment." And now we're all significant partners in those businesses. So I think there's also been kind of an evolution in terms of the buying mindset and the risk profile and just the understanding that the benefits of native cloud offerings and platforms far outweigh the risks. And over time, these platforms, us particularly, have proven ourselves to be highly resilient and highly secure to support their requirements.
The last thing I would say is there's a lot of talk from the financial community about me getting people back in the office. But the reality is this is now a distributed workforce, including traders, that wasn't distributed before. And so platforms that support distributed real-time work, I think, are becoming a bigger necessity in those environments. But we're excited. We think there's still a lot of room to grow. And fintech and financial services is sort of a good leading indicator of what we might see in healthcare and industrials, etc., because when you can prove yourself there, then these other industries start stepping in.
All right. Well, I think we'll have to leave the thanks, Derek and folks. I'll just quickly slip in one quick one. Sanjay did ask a question around whether the margin framework, whether there was any upside to the margin framework. Yes, there's the answer.
Absolutely.
Absolutely. So I'd like to thank everyone who was present here today and pass over to Jen for any concluding comments. And we're right at time. So Jen, you don't have five minutes. You've probably got two minutes before we lose people.
Well, I just want to say I've never been more confident in our opportunity to continue to extend our lead as the digital operations management solution for real-time work and increasingly become the Operations Cloud for modern enterprise. We've talked about a framework to get to a billion. I think that is reasonable in the next three to four years with inorganic and organic growth. And I'm excited about the opportunity for us to demonstrate to the market that we are a great long-term partner and a long-term investment. And we have a strong philosophy on how we balance growth with profitability. And I think we definitely make an effort to do what we say we were going to do.
I'm really excited about the growth drivers that we see in the business, new markets, and the continued success that we're having in our enterprise transition, the support that we get from high-growth and disruptive companies in the mid-market, the opportunity to expand in international and federal, and the opportunity for our platform to expand more readily to an endless number of new use cases and new teams and new functions across the enterprises. We invest in flexibility, connecting to anything and everything with a domain-agnostic ops offering and leaning heavily into more and more automation in service of the people who are responsible for not only managing the front lines of the digital world, and frankly, the whole world is now digital, but architecting, designing, and delivering the brand experience in our on-demand world.
And we're so appreciative of our customers and our partners who put us in a position to be successful because their success, frankly, is our success. And their trust is something that we work to earn every single day. I'm also incredibly appreciative of our investor partners. We learn so much from you. You hold us to a high standard, just like our customers, and that makes us better. So we always appreciate the input and the feedback. And finally, I want to recognize the PagerDuty community, our Dutonians who are both with us and the Dutonian alumni who are out in the market changing the industry. We are only as good as every single team member in this organization. It's an incredibly collaborative environment. It's an incredibly diverse environment where we work to reflect the diverse communities that we serve. And you are the reason that we are successful.
Your ability to champion the customer, to take the lead, to innovate every day, and to bring yourselves to work is what's made us a successful company that I'm incredibly proud and privileged to lead, so thank you, all of you. We want to continue the open dialogue, but we look forward to proving that we are the Operations Cloud for the modern enterprise, and we're excited about the opportunity that's in front of us.
Thank you, Jen.