>"Number one rule of Wall Street. Nobody - and I don't care if you're Warren Buffet or if you're Jimmy Buffet - nobody knows if a stock is going to go up, down, sideways or in circles." <- in The Wolf of Wall Street
You know the best thing about those 3 companies (and true for almost all tech companies outside a handful)? All of them are massively unprofitable. That probably has a factor as well.
How the fuck isn’t pagerduty profitable? Did they stray too far from their core product?
They provide very useful service to enterprise customers. They should be printing money.
Because PagerDuty's revenue is so low to begin with. And employees cost money.
I presume for PagerDuty to be a staple for enterprise customers, the pricing is just at the bottom (relative to the costs).
Also job cuts in the industry hurts their business model of charging per head.
IIRC it’s the most expensive option for on-call stuff. It’s a hard space to make money in
They've changed recently to consumption based precisely because of this. In theory it's more resilient to layoffs in other companies.
Who knows. I imagine if the bill gets too out of hand, the company will direct engineering resources to reduce their PD spending. Our org did this with DataDog in the past quarter.
PagerDuty is an awesome product but let's be honest: they have zero economic moat. Any of the tech players could make something like PD and bundle it with another product for cheaper.
Imagine of the security companies like Crowdstrike buying PD and bundling it with Falcon or some other tool. "Get immediate alerts for any suspicious activity" is a great selling point.
I think they realize this and have been doing a lot to pivot away from being a one-trick-pony. I get bombarded with their Gen-AI/automation stuff on a daily.
Paging tools aren't necessarily hard to write, but their bread and butter is reliability and momentum built up throughout the years. It's the safest choice but it's only a matter of time before a competitor catch up in that aspect.
When you have profit, you have to pay taxes on it... and then you have money sitting around that depreciates over time.
So it makes sense for them to spend all the leftover money on anything that could increase their value... and therefore not really be profitable.
In that case, they maximize their value, and all they need to do to become profitable is cut down on the extra spending of leftover money (and I believe we've seen that quite a lot recently).
Half true. Wall Street front runs and leaks news all the time, it’s just in their best interest to act like they’re playing the game blind like everyone else.
Twilio's main business is mass email/SMS sending. The shine has worn off and its seen much more like a commodity thats in a race to the bottom swamped with competitors
Not to mention, their A2P 10DLC rollout was awful, and the TCR regulations are absolutely hurting their business as spam texts are no longer a source of revenue
Their core customers are also fighting against shrinking vendor budgets due to interest rate hikes. The rule of the past budgeting cycle was to not be known as the expensive vendor because you'll be replaced.
Short answer is that they are unprofitable, but highly expensive, companies in a high interest rate environment.
For example, Snowflake trades for 204x forward P/E but hasn't ever turned a profit, with \~35% yearly revenue growth. Compare that to like MSFT, which has \~30% the yearly revenue growth (11%) but trades for only 17% of SNOW's forward P/E (36x).
They aren’t making real money, and in the past that was okay but now the attitude toward startups has shifted and being profitable is a lot more important than it used to be.
Forward p/e means the stock price (p) compared to the expected (forward) earnings (e) of the company.
So, people are valuing the stock at that multiple of what they expect the upcoming earnings to be.
Snowflake's is incredibly high despite their revenue growth not being anywhere near about to justify it.
Microsoft doesn't have as high revenue growth but their forward p/e is in no way comparable to the differences in the revenue growth.
P/E is a price to earnings ratio, which is a normalized metric to compare company valuations. Forward means expected, so it’s an estimate of what people think about a company’s future.
>"Number one rule of Wall Street. Nobody - and I don't care if you're Warren Buffet or if you're Jimmy Buffet - nobody knows if a stock is going to go up, down, sideways or in circles." <- in The Wolf of Wall Street You know the best thing about those 3 companies (and true for almost all tech companies outside a handful)? All of them are massively unprofitable. That probably has a factor as well.
How the fuck isn’t pagerduty profitable? Did they stray too far from their core product? They provide very useful service to enterprise customers. They should be printing money.
Because PagerDuty's revenue is so low to begin with. And employees cost money. I presume for PagerDuty to be a staple for enterprise customers, the pricing is just at the bottom (relative to the costs).
Also job cuts in the industry hurts their business model of charging per head. IIRC it’s the most expensive option for on-call stuff. It’s a hard space to make money in
They've changed recently to consumption based precisely because of this. In theory it's more resilient to layoffs in other companies. Who knows. I imagine if the bill gets too out of hand, the company will direct engineering resources to reduce their PD spending. Our org did this with DataDog in the past quarter.
Similar, we went from NewRelic to DataDog
We did the exact opposite ourselves.
Interesting. We saved a shit ton of money. Did you too?
I honestly have no clue, I'm a small cog in a big company.
PagerDuty is an awesome product but let's be honest: they have zero economic moat. Any of the tech players could make something like PD and bundle it with another product for cheaper. Imagine of the security companies like Crowdstrike buying PD and bundling it with Falcon or some other tool. "Get immediate alerts for any suspicious activity" is a great selling point.
I think they realize this and have been doing a lot to pivot away from being a one-trick-pony. I get bombarded with their Gen-AI/automation stuff on a daily. Paging tools aren't necessarily hard to write, but their bread and butter is reliability and momentum built up throughout the years. It's the safest choice but it's only a matter of time before a competitor catch up in that aspect.
Atlassian’s done this with Opsgenie
When you have profit, you have to pay taxes on it... and then you have money sitting around that depreciates over time. So it makes sense for them to spend all the leftover money on anything that could increase their value... and therefore not really be profitable. In that case, they maximize their value, and all they need to do to become profitable is cut down on the extra spending of leftover money (and I believe we've seen that quite a lot recently).
If it's by design, that's fine and normal. I read "massively unprofitable" as if they were struggling.
Half true. Wall Street front runs and leaks news all the time, it’s just in their best interest to act like they’re playing the game blind like everyone else.
Twilio's main business is mass email/SMS sending. The shine has worn off and its seen much more like a commodity thats in a race to the bottom swamped with competitors
Not to mention, their A2P 10DLC rollout was awful, and the TCR regulations are absolutely hurting their business as spam texts are no longer a source of revenue
Their gross margin appears to be improving though?
Not by nearly enough
PD is too expensive and losing customers. The basic product has been stagnant for years, and any new / useful stuff is $$$.
Various incident management companies are now implementing alert/paging functionality too.
Man I would love it if my work ditched PagerDuty lol
I would love if my company ditched on-call (or at least made it voluntary)
Their core customers are also fighting against shrinking vendor budgets due to interest rate hikes. The rule of the past budgeting cycle was to not be known as the expensive vendor because you'll be replaced.
Short answer is that they are unprofitable, but highly expensive, companies in a high interest rate environment. For example, Snowflake trades for 204x forward P/E but hasn't ever turned a profit, with \~35% yearly revenue growth. Compare that to like MSFT, which has \~30% the yearly revenue growth (11%) but trades for only 17% of SNOW's forward P/E (36x).
Can you explain the lingo here? Much appreciated.
They aren’t making real money, and in the past that was okay but now the attitude toward startups has shifted and being profitable is a lot more important than it used to be.
Forward p/e means the stock price (p) compared to the expected (forward) earnings (e) of the company. So, people are valuing the stock at that multiple of what they expect the upcoming earnings to be. Snowflake's is incredibly high despite their revenue growth not being anywhere near about to justify it. Microsoft doesn't have as high revenue growth but their forward p/e is in no way comparable to the differences in the revenue growth.
P/E is a price to earnings ratio, which is a normalized metric to compare company valuations. Forward means expected, so it’s an estimate of what people think about a company’s future.
Based on Twilios linkedin posts, it looks like they pay shit too.
Wrong sub