Because of the government shut down earlier in the year, there was a delay in with IPOs as the SEC could not evaluate the filings. But now it looks like the market is getting ready for a flood of deals.
One of the first will be PagerDuty, which was actually founded during the financial crisis of 2009. The core mission of the company is “to connect teams to real-time opportunity and elevate work to the outcomes that matter.”
Interestingly enough, PagerDuty refers to itself as the central nervous system of a digital enterprise. This means continuously analyzing systems to detect risks but also to find opportunities to improve operations, increase revenues and promote more innovation.
Keep in mind that this is far from easy. After all, most data is just useless noise. But then again, in today’s world where people expect quick action and standout customer experiences, it is important to truly understand data.
The PagerDuty S-1 highlights this with some of the following findings:
- The abandon rate is 53% for mobile website visitors if the site takes longer than three seconds to load.
- A major online retailer can lose up to $500,000 in revenue for every minute of downtime.
- A survey from PricewaterhouseCoopers shows that 32% of customers say they would ditch a brand after one bad experience.
As for PagerDuty, it has built a massive data set from over 10,000 customers. Consider that this has allowed the company to leverage cutting-edge AI (Artificial Intelligence) models that supercharge the insights.
Here’s how PagerDuty describes it in the S-1 filing: “We apply machine learning to data collected by our platform to help our customers identify incidents from the billions of digital signals they collect each day. We do this by automatically converting data from virtually any software-enabled system or device into a common format and applying machine-learning algorithms to find patterns and correlations across that data in real time. We provide teams with visibility into similar incidents and human context, based on data related to past actions that we have collected over time, enabling them to accelerate time to resolution.”
The result is that there are a myriad of powerful use cases. For example, the AI helps GoodEggs to monitor warehouses to make sure food is fresh. Then there is the case with Slack, which uses the technology to remove friction in dealing with the incident response process.
For PagerDuty, the result has been durable growth on the top line, with revenues jumping 48% during the past year. The company also has a 139% net retention rate and counts 33% of the Fortune 500 companies as customers.
Yet PagerDuty is still in the nascent stages of the opportunity. Note that the company estimates the total addressable market at over $25 billion, which is based on an estimated 85 million users.
Data + AI
But again, when looking at the IPO, it’s really about the data mixed with AI models. This is a powerful combination and should allow for strong barriers to entry, which will be difficult to replicate. There is a virtuous cycle as the systems get smarter and smarter.
Granted, there are certainly risk factors. If the AI fails to effectively detect some of the threats or gives off false positives, then PagerDuty’s business would likely be greatly impacted.
But so far, it seems that the company has been able to build a robust infrastructure.
Now the PagerDuty IPO — which will likely hit the markets in the next couple weeks — will be just one of the AI-related companies that will pull off their offerings. Basically, get ready for a lot more – and fast.