According to a Grand View Research report, the global DevOps market is expected to grow at 19% CAGR to $12.85 billion by 2025. The growth is expected to be driven by the continuing push amongst organizations for digitization and automation of business processes, adoption of cloud technologies, and adoption of agile frameworks. San Francisco-based PagerDuty (NYSE: PD) went public in August last year. But the recent market turmoil has hurt its stock significantly.  

PagerDuty’s Offerings

PagerDuty was set up in 2009 by software developers Alex Solomon, Andrew Miklas, and Baskar Puvanathasan to cater to the “always-on” cloud services. They had realized that constant collaboration of DevOps teams will be critical for all organizations. They started by automating on-call rotations but soon evolved to a platform that helps companies to proactively manage their digital operations and allow teams to build instead of reacting to incidents.

Its subscription-based service allows organizations to get access to a platform where there is constant interaction and collaboration between software developers and DevOps teams. The solution provides DevOps teams with the ability to access real-time data to address incidents that occur. Its platform collects signals from multiple software-enabled systems or devices and correlates and interprets these signals to identify events and then engages the right team members to address issues identified through this analysis. It leverages machine data and human response data to embed in analytics, machine learning, and automation within the platform to drive performance improvement.

PagerDuty estimates that its TAM includes the nearly 85 million users in the developer, IT, security, and customer support segments. Currently, it has less than 1% penetration in this market and it believes that the total market for its services is more than $25 billion. Its biggest product is the On-Call Management platform that helps drive and manage on-call schedules and escalations. The product features live call routing, flexible notifications, self-serve schedule management, automated escalations, and mobile incident management capabilities.

PagerDuty’s Financials

Last month, PagerDuty reported its fourth-quarter results. Revenues for the quarter grew 37% over the year to $45.9 million, ahead of the market’s forecast of $45.1 million. GAAP net loss was $10.4 million or $0.14 per share, compared with a loss of $6.2 million or $0.28 per share a year ago. On an adjusted basis, loss was $0.03 per share compared with the market’s forecast of a loss of $0.06 per share.

Full-year 2019 revenue grew 41% to $166.4 million. GAAP net loss was $50.3 million, compared to $40.7 million in 2018. On an adjusted basis, net loss was $23.1 million, compared to $15.4 million a year ago.

Among key metrics, it reported over 12,700 customers as of the end of January this year with new names like Vanguard, Shopify, TripActions, WPP, Snowflake, Peloton, American Express, and Bill.com joining its customer portfolio.

PagerDuty forecast revenues of $48-$49 million for the current quarter with an adjusted loss of $0.09-$0.08 a share and revenues of $208-$213 million for the year with an adjusted loss of $0.31-$0.25 a share. Analysts had forecast revenues of $47.8 million for the quarter with a loss of $0.08 a share and revenues of $210.3 million for the year with a loss of $0.23 per share.

PagerDuty’s API Strategy

PagerDuty allows developers to use self-service accounts to build integrations easily. It provides the developers with access to a number of ways to programmatically interact with PagerDuty accounts. Developers can use APIs that can help alter an account’s configuration, pipe events from a monitoring tool into PagerDuty, update other systems when actions take place in PagerDuty or retrieve information about activity on a PagerDuty account. Once developers are done with their development, they also have the option of publishing an app to a wider community of developers.

The platform has built several API integrations with other key technology offerings. Some of the key integrations include those with Salesforce, AWS, Zendesk, and Jira. It continues to enhance these integrations to make a bigger impact on the teams. For instance, its initial integration with Salesforce Service Cloud helped development and customer service teams interact proactively with customer service teams. The Salesforce integration also linked incidents with customer cases in Salesforce. More recently, it enhanced this integration so that customers can now easily interact with other Salesforce clouds including Marketing Cloud, Commerce Cloud, and Quip.

PagerDuty does not divulge any metrics on its API usage. It should open up about its metrics so that its API strategy impact can be assessed.

Its stock is currently trading at $18.13 with a market capitalization of $1.43 billion. It touched a 52-week high of $59.82 in June last year. The recent market turbulence sent the stock to a 52-week low of $12.33 last month. PagerDuty went public in August last year when it raised $218 million by selling shares at $28 apiece at a valuation of $1.8 billion. Prior to going public, the company had raised $173.6 million in six funding rounds from investors including Wellington Management, Andreessen Horowitz, T. Rowe Price, Accel, Bessemer Venture Partners, Harrison Metal, and Baseline Ventures.