And welcome everybody to another smart money circle update.
I'm Adam Sarhan. With me today is Howard Wilson,
who is the CFO, the Chief Financial Officer at Pager Duty.
The ticker symbol is PD. Howard, thank you so much for
taking the time and welcome to the Smart Money Circle.
Thank you, Adam. I'm delighted to be here, so how
would I always like to begin? Can you tell us your story and
how you got to where you are today?
Yeah, I I have a little bit of an unconventional story, Adam.
I didn't start out my career in the finance track.
In fact, my background was software engineering.
So I started my career writing code, which was seems like
decades aons ago in terms of when they all began.
But along the way I actually found that I had a real passion
for solving problems, whatever they were, from a business
consulting perspective. So I really consider myself, you
know, fortunate to have had a career where.
I went from the engineering track into consulting into
project Management into Technical Support management
into operations management I've had.
Roles as the head of operations in large software companies to
also then being a C 00, being a Chief Commercial Officer.
And so interestingly, at page duty, my initial role was really
Chief Commercial Officer covering a whole range of
functions because we were a smaller company back then.
When I joined page of duty, we were, you know, less than 50
million in annual recurring revenue.
This is like 7 years ago. I sort of had a very broad
portfolio. And then inherited finance along
the way and then before our IPO back we IPO in 2019, April 2019,
the year before that I was acting CFO and our CEO said like
what would you think about stepping into the role
permanently? And so I did and I love it.
I love it because I think that the CFO role has certainly
become one that's very business focused and understanding how do
you optimize the business. How do you deal with investors?
How do you deal with customers? And that's what I love about,
but a great journey. So let's talk about Pager Duty,
the business itself. Please give us a general
overview and then any competitive advantages that you
want to share with the audience, please.
Good. So Page Duty is a digital
operations management platform. Companies use us to be able to
manage their digital assets or digital properties in order to
ensure that they can deliver a great customer experience.
So this means that we have 26,000 organizations on our
platform today and within that 26,000 we have some very small
companies to 68 of the Fortune 100 to nearly half of the
Fortune 500. And these are companies that are
relying on us to be able to help them ensure that if there is a
potential issue with their digital application or their
digital website that they're able to respond in a timely
fashion and they're able to respond before customer even
knows that there's an issue or. That if there is a problem that
they can respond really quickly and orchestrate the right people
to solve the problem. So our software automates
everything from the the diagnostics through to the
resolution of an issue. And this has become critical for
large organizations because managing risk and being able to
manage any kind of failure in the business has become critical
if you're a in travel and hospitality or media and
entertainment or online. Commerce or financial services,
being able to deliver that perfect customer experience is
key. So we pride ourselves on being
an enterprise SAS company that helps our customers be
successful in driving their business.
I love it. And Howard, I want to
congratulate you and the entire team because I'm a growth
investor by training. I love finding undervalued
growth stocks and your earnings have been explosive.
You took the company was losing mine the first few years, which
is normal now with contract to be positive in 2324.
Estimates are expected to explode for EPS, if I'm correct,
from about four cents this year to 64 cents next year and then
the 76 cents the year after. That's a, it's stunning.
I mean overwhelmingly, I mean one of the strongest in growth
from a percent standpoint that I've seen and God knows how
long. You've got almost 1500 and plus
percent growth year over year. Earnings are up triple digits,
sales are up double digits each of the last four quarters.
You've got really good pretax margin.
I don't want to get too deep into the weeds here, but just
hats off, I mean super. I mean, you've got explosive
growth going forward. Yeah.
Thanks so much, Adam. I think you know we have as a
company and as a leadership team always focused on how do we
balance growth with profitability.
We've always felt very strongly about being able to run on our
own scene. And so we've been very
programmatic in terms of thinking about how do we
actually move that company as we've grown from when we IPO
around 100 million to now over 400 million in revenue to as you
say being from a on an adjusted basis being negative to now.
Being positive, this will be our second year and you're right
like over 1000 basis points improvements even from 23 to 24.
I mean congratulations on that success because once the market
environment catches on, you're going to see just, I mean at
least my opinion, but OK, beautiful.
So next question, we spoke about risk briefly.
Can you talk about risk, how you handle risk and what are some
lessons you've learned or mistakes you've seen people make
and or you've made and how you avoid them and all that fun
stuff? Yeah I always think you know
managing risk is about balance right.
And and why I say that is there is a human tendency to always
Orient towards the worst outcome and and whilst I believe that
you need to understand the worst outcome.
I think you need to always make sure that you're looking at the
full range of out of of of outcomes and then set yourself
on what's most likely and and part of that experience for me
comes from. I was with a software company
back in 2008 during the global financial crisis or as we came
to court afterwards, and it was a company that actually focused
on servicing the mining industry, which was hit really
strongly by the commodities crisis.
There was also then this whole implosion that was happening in
the financial markets. And we were in a situation where
the company had the potential to because our customers were under
stress, our customers couldn't pay us And we were looking to
contemplate like how do you manage through that environment
and I think. And what we did as a leadership
team, I wasn't the CFO, but as part of the leadership team is
we look really carefully at how did we prioritize the areas that
were most important to our customers and most important to
our employees and try to take a balanced approach, which include
raising debt at a time that wasn't all that great to raise
debt, but that actually gave us the coverage that we needed to,
to move forward. So I always think that when it
comes to risk, it's, you know, don't don't allow yourself to
only be oriented. To the worst outcome, try and
make sure that you approach it with balance.
And I think it's always looking at it through the lens of any
potential risk to the business. It's got multiple stakeholders,
right? There are multiple people who
could be invested in it in some way.
So you need to think about is this a risk for shareholders?
Is it a risk for customers? Is it risk for company
reputation? Is it risk for our employees?
Is there a regulatory element to it?
And so I think it's always been balanced and multidimensional
love that finding multiple layers of risk is really,
really, really critical. So next question for you.
What are some timeless lessons you've learned along the way
that you'd like to share with the audience?
Well, I think one of the things that that sort of came to me
early in my career was really around trying to always draw a
line between what you can control and what you can't,
right? And and sometimes it's it's very
difficult. I know even for me as a person
always feels a very strong sense of responsibility.
I suddenly almost want to feel responsible even for the macro
environment, right. But I can't control the macro
environment. But I do know the things that I
can control. So I think for me a time is less
and this was from a a manager that I.
That kind of back in my early days as a software engineer, she
always used to say to me it's like, okay, let's try and sort
of make a list of what are the things that we can actually
manage and what are the things that we can't.
And that sort of set like a mindset for me around okay, what
can I control? What can I change?
Because there's some things that I can change and there's some
things that I can't. And don't focus your energy on
the things that you can't change.
Focus Energy on the things that you have the ability to impact
and I think even for us as a company in this current
environment we've we've tried to take that mindset like we don't
control the macro. We understand that that our
customers are under pressure. So we need to think about, well,
how do we adjust, what are the adjustments that we can make?
And how can we make them quickly?
And I would say that's been a timeless lesson for me.
It's kind of identify, draw the list.
What's in your control and what isn't.
Yeah, I love that. Especially now.
Like you said, the macro environment's not conducive for
growth stocks. We get that.
But this too shall pass. Just like a hurricane.
If you want to stay dry, you don't go outside when there's a
hurricane, wait for it to pass, and then you get beautiful
weather when it's over. So yeah, that's a really, really
good lesson. Couple that with the multiple
levels of risk that you mentioned earlier, you're now on
to something really good because you're putting framework
together for proper decision making and how to handle stress
and all that fun stuff. So that's really, really
powerful. And I I think, Adam, your point
about this too shall pass. I know, like I've been around
long enough. I've lived through multiple
recessions and economic downturns and through some
really great boom times too. And so I always have confidence
that, you know, the cycle will continue.
And so I've sometimes explained this to, using your hurricane
analogy, tell employees as though you know this is bad
weather that will come right. So what you need to do is in the
good times, before there's bad weather, prepare yourself right.
You have a strong balance sheet. You've got the company into the
right sort of financial profile and then you're able to weather
that storm. But the part when the storm is
over, you're in a position to be able to to then act and be
poised for action. Yeah, no, I love that.
So let's talk about some time with mistakes.
What are sometimes mistakes you've made or you've seen
people make, and how do you avoid them?
Well, I think the one thing is I have a very strong results focus
and I think one of the lessons that I've learned is that.
If you want to be a successful leader, you need to balance your
focus on the task at hand and the people.
I I feel as though I've become very oriented at times where I
like what's the result I'm trying to drive and you can
leave people behind. And I think that's a mistake,
right? And that's something that I know
for myself. I like, have to keep reminding
myself. And even for, you know, when
you're managing people who early in their careers, sometimes you
can forget that what's obvious to you is not obvious to other
people, right. And.
If someone is new in the career and sometimes you feel, well,
I'm repeating myself, but that's actually okay, right?
Because when you repeat yourself, you're helping someone
get the context, you're helping them understand what they need
to do and that will help them. Be with you on that journey.
So I I think for myself, that's one thing.
I'm always trying to strive that balance.
I tell my team, like if I'm becoming too task focused, like
tell me. If it seems as though I don't
care, tell me. Because I do care like I care
very deeply. It's like it's part of for me, I
build a team around people who I really care about and I want
them to be successful. But if you become too focused,
it could seem as though you you you're not paying attention.
Yeah, I know, that makes perfect sense.
I love that. What about leadership?
So it's a perfect segue to my next question.
What makes a great leader and what are some of the best
lessons you've learned about? Leadership, yeah.
I think when I look at some of the leaders who I admire and
respect, I think that they've often had a few characteristics
that stand out to me. The one is optimism.
I think that a strong leader. Needs to be optimistic, not
unrealistic not kind of the Rose colored glasses optimism but
like a realistic optimism around like there is a path we can
succeed let's let's move forward.
I also think there's courage. I think it's very it's it's hard
to be a leader in difficult times.
It's easy to be a leader in easy times, but when times are
difficult, it requires courage because you're needing to say,
well, I'm actually going to step past.
This and I'm going to have confidence in the future and and
then I think being a good leader.
The other characteristic is, is caring deeply about people,
right. And that can be whether they're
your employees or whether they're your customers.
It's like center on the people that are in that equation,
whether they investors, customers, suppliers, employees,
all of those folks because that's really what's going to
help you connect and and ensure that you are bringing real
success. Yeah, that makes perfect sense.
And next question, adversity and some obstacles.
How do you handle adversity and what are some obstacles you've
had to overcome or you've seen other people overcome that you'd
like to share with the audience, please?
Yeah, I mean, I think my first rule around adversity is don't
panic. So I often think that it's.
Case of when you're when a situation is tough or difficult,
when you're facing some adversity, it's like do your
best not to panic because and and sometimes there's a little
bit of a joke around even within our team about the fact that I
can stay calm even under the word circumstances.
But I've almost sucked myself up mentally to say look, no matter
what the situation is, let's get a clear assessment.
And when I have that clear assessment, you know I can, I
can move forward and I think. Part of dealing with adversity
is understanding upfront what's important for you.
And I know from like a personal perspective, when I think about
my career, I have considered myself really honored and
privileged to work with some really great leaders who where
I've had really strong values alignment.
And I think that when you, when you think about what are the
things that are most important to you and I, you know.
People will often try, try, you know, will trot out the things
around, Oh well, you know, honesty, integrity, which I I
agree. Like to me those are table
stakes. But I think it's often about
understanding values, alignment with how people deal with
people. So I think 1 obstacle that I
faced is that even when I first moved to the US many years ago,
I was working, you know, for a company with a leader who was a
great leader. But I realized that that, and I
just moved my family, right? And now this is a situation
where you come in another country and I realized that this
was a very capable leader, really someone who I respected.
But our way of working was just not as well aligned as I would
have liked it to be. And I think you know.
You have an advantage when you've been working for many
years and you're an executive, right?
So there's a luxury associated with that which you maybe don't
have earlier on in your career. But it made me think about well,
what were the values that were most important to me?
Like how do how do I feel about facilitating different opinions
or how do I feel about managing an approach and and that can
then lead you to making decisions.
Doesn't say that either is right or wrong, but it's like what's
important for me. So I think when you think about
adversity, it's like, don't panic.
And I understand upfront what are the things that are most
important to you. Yeah, I love that.
That almost ties back to what you were saying earlier about
the control factor. We're focused on what you can
control, but somewhat with a different flavor of it.
Because it's not so much. Yeah, it's just another layer of
it. I love that.
So before we go on to the next question, it sounds like you're
very much focused on the now. Do you meditate at all or do
you, when crisis hits, you step back and you notice that?
Hey, this is happening. Let's take a breath and stay
calm here and then focus on what we can control or however you
want to, you know, slice it up and dice it up.
But you stay calm. Speak a little about that,
please, because I've noticed that's a commonality with many
of the the C-Suite executives that come on the show where they
have this uncanny, yes, they have the optimism, which you
mentioned as well, but also the ability to stay calm as bullets
are flying. How do you, what does that
process look like? How do you?
So I am a person who loves walking.
So I I kind of have a goal. I walk 100,000 steps a week,
like that's kind of my minimum. And and that is that's almost,
if you like a bit of a moving meditation, although it's not
structive. But I I do that every morning
and every evening I walk and that's kind of my thinking time.
Majority of the time I'm not listening to anything, it's just
time to think. And I find that that's always
such a good reset at the start of the day.
It's an opportunity. For me to think about what have
I got to get done sometimes, but I try and force myself as well
to think about like okay, Where am I now?
What am I enjoying? I mean living in San Francisco,
lovely city, able to enjoy good weather most of the year.
All those things sort of help send to me.
If they if we are going through a difficult time, my go to is
like I'm going for a walk, right?
Maybe go for a walk because I can clear my mind, I have get
rid of any other stimuli and I'm able to to to focus on things.
I love that. So I'm a Walker too.
I mean this is our first time that we meet but I found that it
is incredibly, incredibly liberating and powerful and just
quieting the mind. I don't have my ear pugs in or
headphones and I see people doing, I don't do any of that
stuff either. And yeah, I absolutely love what
you're saying here because it's so incredibly powerful to just
step out and almost like look at things from a Third Point party
point of view. It was like, what would this
character do in the movie? Type of a thing.
Yeah, okay, I love that. Thank you for that, Howard.
So let's talk about advice. What's the best piece of advice
you'd like to share with the audience or with your 30 year
old self? I think the piece that I would
share is really around understanding that everyone can
make. The contribution I I remember
early on in my career as well. I was working for a small
software company in South Africa and one of our managers leaders
there. One of these days that the
company had given, I was in a design session and I was
listening in. I was early in my career.
I was a little bit nervous to say anything and I I had a view.
I had an opinion and and I I made the statement I said if I
could put in my $0.02 worth. I'd like to tell you, you know
what I have to say. So John listened to all of this
and he said, okay, that's great. And then afterwards he said to
me, you know how I don't ever want you to use the term 2, your
two cents worth. And I was like, what have I
said? And he said, well, it
undervalues your contribution, right?
So you we employed you because we felt you had a contribution
to make from day one. And I always want you to think
about about that always make a contribution, don't undermine
it, always see that you can that you can do that.
And I think like for our teams and for our people we should
always create an environment where everybody can can have a
contribution, doesn't matter if they're new with the company or
they've been with the company for a long time, doesn't matter
where they come from. And I think that's, you know,
one piece of of advice that I think is.
Is important. And I also think never don't
feel obliged to stay in your lane.
Like I think I've become a public company CFO when I
started out as a software engineer.
So there's no reason to feel that you have to stay in one
track. Be prepared to sort of step
forward. Try something else.
If people take a chance on you, grab it like go and give it a
try. I love that, Will Howard, thank
you so much for coming on the show.
It's been an absolute delight and your stock is in my opinion,
super, super set up for massive growth going forward.
I'm excited to see the earnings growth.
The over 1500% growth year over year is fantastic, another 80%
thereafter. So hats off to you and your
team. Ticker symbol is PD.
People can learn more on Pager Duty.
The website is. Let me see that.
Do you want the IR page or do you give the pagerduty.com the?
Pagerduty.com is good and you can navigate.
To our IR page from there, Beautiful.
Well, thank you so much for coming on the show and hopefully
we'll see you on it again soon. Thank you, Adam.
We really appreciate the opportunity.