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PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

forbes.com

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Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#11

Post by throwaway5752 »

NickBusey wrote: post #2

Using a very naive calculation of valuation = 5x yearly income, is PagerDuty really pulling in $260,000,000/year? My company is currently paying them about $90/month. or $1,080/year. We are most likely one of the smallest clients they have, but that is still quite a leap.

That's not income, that's revenue/run rate. Also, your 5x revenue (while reasonable historically) is out of line with current valuations for peers. A couple of similiar public ones: Atlassian is almost 25 x ttm sales and and Zendesk is 15.

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#12

Post by juliend2 »

Well, this announcement https://techcrunch.com/2018/09/04/atlassian-launches-jira-op... by Jira, 2 days ago, regarding Jira Ops and their acquisition of OpsGenie, might have helped PagerDuty (don't want to downplay PagerDuty's value here) to get that valuation.

I think this is good news!

Edit: formatting, added more precision

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#13

Post by drb91 »

samstave wrote: post #9
pbiggar wrote: post #6

Earlier quoted context omitted.

"The company says it passed $100 million in annual recurring revenue in recent months"

Assume 100MM/yr - if they have ~20K paying customers with an avg of $500/month per customer, that number is easily achievable. They will have a long-tail of free, and small clients - then a few whales and it seems completely doable... Pagerduty is a great service.

> Pagerduty is a great service.

Well, they're good at alerting. They're not great at incident revie/. The interface makes it pretty difficult to look at, say, "what are all the incidents I got paged for related to this schedule".

In general, the interface is pretty painful to use for large organizations. This is a fairly common theme, though....

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#15

Post by whalesalad »

I was a PD customer for 3 years at FarmLogs. There was literally zero innovation or development on that product during the entire time there. It was abandonware. I am shocked that they're dominating this space with such lackluster enthusiasm about their own product.

I'm not just referring to a lack of new features... it’s a lack of improving their core product. It's buggy and painful to use. I can’t tell you how many times acknowledging an issue (during the crisis around the issue) failed and caused cascading problems with other engineers being paged. That’s the one thing this product should do without fail.

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#17

Post by foodstances »

whalesalad wrote: post #15

I was a PD customer for 3 years at FarmLogs. There was literally zero innovation or development on that product during the entire time there. It was abandonware. I am shocked that they're dominating this space with such lackluster enthusiasm about their own product. I'm not just referring to a lack of new features... it’s a lack of improving their core product. It's buggy and painful to use. I can’t tell you how many…

What did you find it lacking?

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#18

Post by paxys »

NickBusey wrote: post #2

Using a very naive calculation of valuation = 5x yearly income, is PagerDuty really pulling in $260,000,000/year? My company is currently paying them about $90/month. or $1,080/year. We are most likely one of the smallest clients they have, but that is still quite a leap.

> Using a very naive calculation of valuation = 5x yearly income

How did you come up with that metric? Pretty much every company at that stage has negative income. If you mean revenue, that isn't accurate either. Even the largest tech giants are valued at ~8x annual revenue or more, and that number is higher for the SaaS sector. It is common for a smaller, fast-growing company to be valued at 15-20x ARR.

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#19

Post by zjaffee »

whalesalad wrote: post #15

I was a PD customer for 3 years at FarmLogs. There was literally zero innovation or development on that product during the entire time there. It was abandonware. I am shocked that they're dominating this space with such lackluster enthusiasm about their own product. I'm not just referring to a lack of new features... it’s a lack of improving their core product. It's buggy and painful to use. I can’t tell you how many…

Honestly I think that's just a result of the fact that enterprise software is a sales driven business much more than it is a product oriented one. Additionally, especially in backend tech products, migrating can require a sizable number of man hours for limited results.

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#20

Post by zjaffee »

benjaminwootton wrote: post #4

Amazing how a relatively niche product like this can have such a huge valuation. Shows how big the market is.

It's because they can charge a huge amount for their service, where there is relatively low costs of operations compared to other enterprise products. It's amazing how they are able to charge as much as a product like slack.
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