
PagerDuty S-1 - johns
https://www.sec.gov/Archives/edgar/data/1568100/000162828019003003/pagerdutys-1.htm
======
teej
> If we fail to offer high-quality support, our business and reputation could
> suffer.

I don't know how common this is in S-1 filings but it stuck out to me. Support
is often viewed as a cost center, I love that PagerDuty makes it such a high
priority.

Edit: After some research, it turns out this is common. Docusign, Dropbox,
Okta, Zuora, and MongoDB all have this statement exactly or similar.

~~~
krn
> Support is often viewed as a cost center

Support is a cost-center for B2C companies, but one of the most important
parts for B2B.

~~~
penagwin
Part of what Businesses pay for is support. Heck think of all the free
databases/open source stuff that is funded not by the code but buy offering
support/integration.

EDIT: Funny though, as a consumer I'd pay a little more, say 20% more for my
comcast bill if they had what I'd describe is "nice and helpful support", but
if that was the case, my bill would likely be accurate, and we wouldn't have
all these BS fees and charges showing up out of nowhere, which coincidentally
can make my bill 20% higher then advertised.

~~~
zeroonetwothree
You can get Comcast Business service. That's basically what it is. They have
very good support but costs a bit more.

------
cm2012
Professional marketer perspective:

Sales and Marketing is around 60% of revenue at 47 million a year. Advertising
is around 5 million a year, so the rest of the spend looks like sales costs,
content production, and maybe event marketing.

The media spend seems to be mostly adwords: "The effectiveness of our online
advertising has varied over time and may vary in the future due to competition
for key search terms, changes in search engine use, and changes in the search
algorithms used by major search engines."

Also, they only have 5000 FB likes - if they were spending $100k+ a month on
FB these likes would be higher as a byproduct of the paid spend. I do a ton of
B2B/SMB FB advertising, my guess is that they could move some spend to FB from
AdWords and see better ROI.

~~~
hn_throwaway_99
Jesus, do people really like company FB pages (especially B2B companies) at
all these days?

~~~
cryptonector
What's FB?

~~~
cm2012
Facebook

------
zsj888
Am I reading it wrong? They don't fill the data in section MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS:

....The majority of our revenue is derived from midmarket and enterprise
customers. As of January 31, 2019, we had more than customers globally, with
[missing #?] customers having ARR in excess of $100,000, and [missing #?]
customers having ARR in excess of $1,000,000. Our 10 largest customers
represented approximately [missing #?] % of our revenue for the fiscal year
ended January 31, 2019, and no single customer represented more than [missing
#?] % of our revenue in the same period, highlighting the breadth of our
customer base. We serve a vital role in our customers’ digital operations and
grow with them as their needs expand. As such, we have developed a loyal
customer base, with total ARR churn representing less than [missing #?] % of
beginning ARR for the fiscal year ended January 31, 2019. Our ARR churn rate
represents lost revenue from customers that contributed no revenue in the
measurement period but did contribute revenue in the equivalent prior year
period. We generally bill monthly subscriptions monthly and subscriptions with
terms of greater than one year annually in advance.

~~~
carlosaguayo
There are many fields that can be left blank when filing an S1. They get
filled in as time moves on, but need to be complete before the IPO takes
place.

~~~
anovikov
What's the point of filing then? It sounds like absolutely critical data.

~~~
manquer
I guess the people who they want to know will have all the information
already. Nowdays S-1 filings can be confidential until three weeks before the
IPO, many rules of the market do not make it a even playing ground for retail
investors.

------
nicholasjbs
Congrats to the whole PagerDuty team!

We were in the same YC batch (S'10), and the founders were all kind, smart
people. They were also determined and hard-working: I believe they'd been
rejected by YC three times before getting in.

------
lucb1e
To save anyone else from staring at the page for a minute (wondering if it's
linked just because it looks like 1992 called, not knowing what the "sec" USA
government department does or what an S-1 form is): PagerDuty seems to be
going to the stock market.

~~~
ChaseSommer
Thanks, I was quite confused.

------
ec109685
PagerDuty is super expensive. With Slack or another messaging app, you just
need a system that will support a schedule and route to engineers
appropriately as well as post to the slack channel. A lot of the bells and
whistles they have aren't useful. Engineers never need to actually use the
Pager Duty website and only use the app for ack'ing the page or just do that
in Slack.

This feels like it should be more of a commodity. E.g. a service like OpsGenie
can undercut them.

$100 a month per user on their enterprise plan is insane for what they offer:
[https://www.pagerduty.com/pricing/](https://www.pagerduty.com/pricing/)

~~~
awakeasleep
What industry are you in where you care about getting paged after hours, but
you're happy tying your paging to Slack's availability, and you have the
engineering time to devote to recreating and maintaining a paging system?

I'm sure there are industries where that makes sense, but I bet you can
imagine there are industries and companies where that doesn't add up.

~~~
ec109685
You still need something like PagerDuty, OpsGenie, etc. for the on call
rotation and routing. All I am saying is all the other 1000 features they
offer and charge for aren’t needed when you don’t really use their web site at
all.

~~~
ec109685
Also, my company switched from PagerDuty to OpsGenie and after a week everyone
was used to the new system, so that strikes me as more of a commodity.

------
stygiansonic
Interesting that they reference their Glassdoor rating:

 _The strength of our culture is key to attracting and retaining the best
talent, as demonstrated by our high employee retention rates, and, as of
January 31, 2019, a Glassdoor rating of 4.5 out of 5 and 100% approval rating
of our chief executive officer._

~~~
eastendguy
Uh, that is a big negative sign for me, because they have an an "employer
active" account. In other words, they pay for the privilege to get reviews
deleted.

> 100% approval rating of our chief executive officer.

So I am 99.99% sure that HR was tasked with removing bad reviews ;-)

~~~
chipperyman573
Is there any evidence that glassdoor lets employers do this? I think glassdoor
actually specifically says that they won't, unless it violates a law somehow.
They even specifically state that they "don’t take sides in factual or
contractual disputes between employers and reviewers."

[https://help.glassdoor.com/article/I-m-an-employer-What-
can-...](https://help.glassdoor.com/article/I-m-an-employer-What-can-I-do-
about-negative-reviews-on-Glassdoor/en_US/)

~~~
decebalus1
[https://reputationresolutions.com/remove-glassdoor-
reviews/](https://reputationresolutions.com/remove-glassdoor-reviews/)

------
umeshunni
2017: $79.6M revenue, ($38M)in losses.

9 months of 2018: $84M revenue, ($34.5M) in losses.

Costs seem generally under control except the significant growth (+66%) in G&A
expenses.

Why the hurry to IPO?

~~~
baq
My mostly uninformed opinion is that smart money smells blood around the
corner and wants to cash out before it gets bad. Mass retail store closures,
layoffs, IPOs, ...

~~~
jkravitz61
Even if true, this will largely not affect a business like this. They make
small money on each company and scale through the shear number of total
companies that pay a few thousand dollars a month to use this service. People
are not going to stop going on call because their revenue dropped 20%...

~~~
yeukhon
The market is still hot. You don't want to go IPO at say $50 and no trades.
When the market crash everything will crash along with it. Some investors are
probably very eager to cash out now than later.

------
whalesalad
PagerDuty feels like abandonware. It hasn't changed in the last 4-5 years.

~~~
dharmab
When I call my insurance or bank, I get a pleasant voice interface.

When PagerDuty calls my carphone (or worse, my motorcycle helmet
communicator), I get an inhuman civil defense robot from 1980 that only
accepts touch-tone inputs.

~~~
ttul
But, it absolutely never fails.

~~~
gmjosack
This is not true in my experience. I led the monitoring team at my past job
and we spent a non significant effort monitoring PagerDuty due to often delays
in ingestion and notification. If you page through their status page[1] they
have a problem with delayed ingestion or notification almost monthly. If
people actually monitored they'd be surprised how often they miss SLA.

[1]
[https://status.pagerduty.com/history?page=1](https://status.pagerduty.com/history?page=1)

------
throwawaykings
This makes them probably the second ever YC company to go public, the first
being Dropbox. Also related:
[https://news.ycombinator.com/item?id=758653](https://news.ycombinator.com/item?id=758653)

~~~
teej
Super quick napkin math on YC's investment. Many of these assumptions will be
wrong.

    
    
        YC investment: $120,000 [0]
        YC shares: 1,050,000 [1]
        PD market cap: $1.3 billion [2]
        PD share price: $20.23
        YC investment value: $21.25 million
        YC ROI: 175x
    

This is a ~4x return on the S10 batch. In that same batch you have Stripe,
which looks like it could be a 3000x+ return for YC.

Notes

[0] - This could be less, I don't remember the dates YC started messing with
this.

[1] - The 3 founders hold 13,670,067 shares, or 91% of 15M shares. I assume YC
has 7% of 15M.

[2] - I assume their Sep 2018 raise valuation as the price. I'm not confident
the public will value this the same.

~~~
skinnymuch
Thanks for this! Love to see quick math.

How do you account for dilution though? I’m not too familiar with how it all
works, but in this case does it not matter because the amount of shares stays
the same? Only total shares have changed?

And yeah Stripe will be a crazy multiplier that has to be at least 2000x and
could be over 3000x like you said. I’m guessing they never sold any shares.
Especially seeing Square’s market cap above $30B and PayPal at $120B.

------
ikarandeep
[https://news.ycombinator.com/item?id=758653](https://news.ycombinator.com/item?id=758653)

its cool to see how far they've come

------
thanatos_dem
<rant>

I run a service that integrates with pager duty on behalf of our users, and
man oh man did they make some poor design choices with their API.

The most glaring one is their integration keys, which is how you trigger an
alert. They’re just v4 uuids with the hyphens removed, or in other words,
completely random.

This is fine by itself, except they have two versions of their event API, and
keys for the v1 API don’t work with v2 and vice versa. And there’s no way to
distinguish what version a given key is for, since it’s just a jumble of
bytes. We can’t even look up the service integration to find out what version
it should be. We can using yet another different API, but even then it’s not
clearly distinguished.

So now our users are confused about what version they should use. We only
supported v1 for a while since there was no way to distinguish, but users kept
using v2, which was failing cryptically.

So now we need to try v1, and if it fails try v2. But that means that our
monitoring on errors are all fucky now since half the errors arent real
errors.

In the grand scheme of things I guess it’s a relatively small design issue,
but it sitting right in the middle of their one and only critical path, which
makes it really painful.

I’ve alrwady contacted support about it and their response has been, more or
less, “oh, uhhh... huh.”

</rant>

~~~
grouseway
One of the nice little features that I appreciate about Twilio, and have
adopted myself, is their API keys are always prefixed with a 2 character type.

e.g.

"account_sid": "ACXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX", "phone_number_sid":
"PNXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX", "sid":
"CAXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX",

~~~
jerf
Hard-won pro-tip: IDs should pretty much always have some sort of prefix when
stored as strings, even if you swear you're never going to change them. You're
not going to want to try to divine which id was which based on string length
or what chars are where later.

I qualify "when stored as strings" because id numbers in database rows are in
a sufficiently strong context on their own, for instance. But once they get
serialized to strings, you really ought to stick a prefix on them. You may
only change 10% of your ids, but the saving on that 10% will be well worth the
cost of prefixing your ids.

~~~
ex3ndr
But why this doesn't needed if you use numerical ids?

~~~
cbhl
If you work on a sufficiently long lived system, you also discover that you
usually want string ids instead of numerical ids.

Among other things, numerical ids are subject to enumeration attack
(especially if exposed in a GET url parameters).

------
raiyu
They just raised a round in September of 2018 at $1.3B so it will be
interesting to see where the public market values the company.

2017 revenue: $79.6MM 2018 revenue (est): $117.8MM 2019 revenue (est):
$164.9MM 2020 revenue (est): $214.3MM

Safe guess potentially 10x current year (2019) which would be $1.6B.

Considering that they need an IPO pop the shares would be priced about 20-25%
lower, bringing them back to that $1.3B private round valuation.

Unless the bankers are very optimistic and it will trade higher in which case
they would be looking to price at the $1.6-1.7B range and hope that it pops to
$2B at open.

~~~
jgalt212
You need to dream bigger. Palantir looking to go public at 45X revenues.

[https://news.crunchbase.com/news/palantirs-2018-revenue-
said...](https://news.crunchbase.com/news/palantirs-2018-revenue-said-to-
exceed-prior-forecast-approaching-1b/)

~~~
redwood
That would be so absurd

~~~
nojvek
I think the market isn’t crazy so they can start at whatever and feel reality
will slap them sober. Like Dropbox and Snapchat experienced.

------
us0r
>In October 2018, the Company entered into a cloud services agreement for
third-party hosting of the Company’s software platform through October 2021.
The Company is committed to spend a total of $13.5 million for the services
through the term of the agreement

Not as bad as some of the others lately but this works out to around
375k/month.

------
kevintb
Congrats on PagerDuty!

------
chx
I set my PagerDuty to the meow sound and I often refer to our processes as
meow driven development as in I don't like my phone to meow desperately.

~~~
DKnoll
If I worked in the same office as you I would 100% play Jingle Cats when
walking past.

If I don't change my page sound frequently enough I start getting a weird
Pavlovian response.

~~~
crooked-v
> If I don't change my page sound frequently enough I start getting a weird
> Pavlovian response.

I had to do the same with my alarm clock, and eventually settled on talk radio
because it didn't seem to cause the same effect.

~~~
gotocake
When I was a kid I got a two deck cassette player and alarm clock combo. I
used it as my alarm for about 16 years, and I still get a weird feeling if I
hear that precise tone. It makes me feel a bit sleepy and disoriented for a
split second. With the same clock I also started to wake up to the sound of
the system powering up the speakers to play the torn before the tone sounded.
It seems I’d slap the snooze button _in my sleep_ so I had to get a new alarm.

------
walshemj
Why would any sane person buy shares with this power vested in the board

"authorize our board of directors to issue, without further action by the
stockholders, shares of undesignated preferred stock with terms, rights, and
preferences determined by our board of directors that may be senior to our
common stock;"

~~~
miketery
I believe this is how it typically works. The board is hired by the
shareholders to act in their interest. The board has a lot of powers. The
shareholder if unhappy with the boards performance can fire the board.

~~~
walshemj
Did you not read the bit without further reference to share holders - the
board can issue new shares to dilute existing share holders.

